# Presentation: 221122

## U.S. Department of Education

**U.S. Department of Education**
**Federal Update**

**David Bergeron**
**Office of Postsecondary Education**
**Dan Madzelan**
**Office of Postsecondary Education**
**Jeff Baker**
**Federal Student Aid**

## Appropriations andBudget Submission

## FY 2006 Program Budgets(dollars in thousands)

## FY 2007 Budget Request Appropriations

***    President's FY 2007 Budget Submission**

## FY 2007 Budget Request Aid Available

*** President's FY 2007 Budget Submission**

**Notes:**
I’ll now talk about the specific proposals to go along with these requests. 

There are no new proposal around the new Academic Competitiveness Grants and SMART Grants other than additional funding.  I would note that these programs are funded out of the mandatory side of the budget similar to the loan programs as opposed to the discretionary side which includes Pell and the campus-based programs.

## FY 2007 Budget Request

**Federal Pell Grant Program**
**Maximum award for 2007-2008 remains at $4,050**
**Year-round Pell Grants**
**Eligibility limited to equivalent of 16 semesters**
**Tuition sensitivity award rule eliminated**

**Notes:**

Maximum award for 2007-2008 would remain at $4,050
Pell Grants would be made available year-round at eligible 2- and 4- year degree granting institutions, to encourage students to accelerate their studies.
As an incentive for students to complete their programs on-time and to eliminate an area of potential abuse, Pell Grant eligibility would be limited to the equivalent of 16 semesters.
Propose to eliminate the “third award rule” related to tuition sensitivity.  The rule currently limits the amount of support that students with greatest need receive while attending low-cost institutions.

## FY 2007 Budget Request

**Campus-Based Programs**
**No changes for FSEOG and FWS programs**
**Perkins Loan Program**
**No funding for FCC or for loan cancellations.**
** ****Repayment to ED for collections by school from borrowers**

**Notes:**

Maximum award for 2007-2008 would remain at $4,050
Pell Grants would be made available year-round at eligible 2- and 4- year degree granting institutions, to encourage students to accelerate their studies.
As an incentive for students to complete their programs on-time and to eliminate an area of potential abuse, Pell Grant eligibility would be limited to the equivalent of 16 semesters.
Propose to eliminate the “third award rule” related to tuition sensitivity.  The rule currently limits the amount of support that students with greatest need receive while attending low-cost institutions.

## FY 2007 Budget Request

**FFEL and Direct Loans**
**No changes proposed for Loan Programs**
- See Higher Education Reconciliation Act
**Other Programs**
**No funding requested for—**
- LEAP, GEAR UP, Upward Bound, Talent Search, and Byrd Honors Scholarship

**Notes:**

Maximum award for 2007-2008 would remain at $4,050
Pell Grants would be made available year-round at eligible 2- and 4- year degree granting institutions, to encourage students to accelerate their studies.
As an incentive for students to complete their programs on-time and to eliminate an area of potential abuse, Pell Grant eligibility would be limited to the equivalent of 16 semesters.
Propose to eliminate the “third award rule” related to tuition sensitivity.  The rule currently limits the amount of support that students with greatest need receive while attending low-cost institutions.

## Higher Education Reconciliation Act of 2005

**(HERA)**

## Institutional and Program Eligibility

## INSTITUTIONAL & PROGRAM ELIGIBILITY

- Definition of academic year for clock hour** **programs
- 50% rule does not apply to telecommunications
- Programs of distance education must be specifically accredited
- Short-term telecommunications programs are eligible
- Provision for programs using assessment to measure progress
** **

## Loan Programs

## FFEL and Direct Loans

_**PLUS Eligibility to Graduate Students:**_**  Extends eligibility for PLUS Loans to graduate and professional students.  **
**All eligibility criteria remain including credit checks and no in-school status.  However, student would be eligible for an in-school deferment.**
**Student must file FAFSA **
**Effective for any loan certified or originated on or after July 1, 2006**

##   FFEL and Direct Loans

_**Effective **_**for loans certified or originated on or after **_**July 1, 2007:**_
- Loan Limits in FFEL and Direct Loan:
- Increases annual base loan limits for -
- First year students from $2,625 to $3,500;
- Second year students from $3,500 to $4,500
- Aggregate loan limits are not increased.
** **

##   FFEL and Direct Loans

_**Effective **_**for loans certified or originated on or after **_**July 1, 2007:**_
**Increases annual additional unsubsidized for --**
**Graduate students to $12,000**
**Prep for Grad Program $7,000**
**Teacher Certification to $7,000**
**Aggregate loan limits are not increased.**
** **

## FFEL and Direct Loans

**FFEL PLUS Loan Interest Rate:**
**Fixed interest rate for new loans made on or after July 1, 2006 from 7.9 to 8.5 percent.  **
**Direct PLUS loans will remain at a fixed rate of 7.9 percent. **
**Effective date is for loans first disbursed on or after July 1, 2006.**
**	****NOTE:  New Stafford Loan interest rates for new loans in both programs will be fixed at 6.8 percent.**
**	**

## FFEL and Direct Loans

**CONSOLIDATION LOANS**
**Generally no re-consolidation**
**Applies within and across programs**
**Eliminates In-School consolidations in Direct Loans and “early conversion to repayment” consolidations in FFEL**
**Eliminates Joint Consolidations**
**Effective July 1, 2006**
** **

## FFEL and Direct Loans (Perkins)

_**Active Duty Military Deferment:**_
**Provides for a military deferment of up to three years for FFEL, Direct Loan, and Perkins Loans that were first disbursed on or after July 1, 2001.  Includes definitions of “active duty”**
**Effective: July 1, 2006**

## Cost of Attendance (COA)Need Analysis and Packaging

## COST OF ATTENDANCE 

**COA for less than half-time students may include room and board costs, at school’s option**
**COA may include, at school’s option, the one-time cost of obtaining the first professional license or certification**

## CALCULATION OF EFC  - 2006-2007

**SIMPLIFIED NEEDS TEST AND AUTO ZERO EFC**
**Increases to $20,000 the threshold under which a family would automatically have an EFC of zero **
**Eliminates consideration of dependent student’s tax return for both SNT and Auto-Zero EFC**
**Tax return alternative if family received benefits from a Federal means-tested program  **

## CALCULATION OF EFC  - 2006-2007

**Treats all 529 Pre-Paid and Tuition Savings Plans as assets of the owner, unless the owner is the dependent student**
**Excludes small-businesses from assets**
**Adds active duty military to the criteria that makes a student independent**
**	**

## CALCULATION OF EFC – 2007-2008

**Income Protection Allowances**
**	****Increases Income Protection Allowances. **
**Asset Assessment Rates**
**	****Decreases Asset Assessment Rates**

## Student Eligibility 

## 	DRUG CONVICTION

Provides that an applicant loses eligibility for Title IV aid only if the drug related offense for which he or she was convicted occurred while the student was receiving Title IV aid.  

**Provides that an applicant loses eligibility for Title IV aid only if the drug related offense for which he or she was convicted occurred while the student was receiving Title IV aid.  **

## Return of Title IV Aid

## RETURN OF TITLE IV AID (R2T4)

**Excludes LEAP/SLEAP **
**Specifies that scheduled clock hours are used to determine earned aid**
**Clarifies that multiple leaves of absence are permitted**
**Limits a grant overpayment due from a student to the amount by which the original overpayment amount exceeds half of the total grant funds received by the student**

## RETURN OF TITLE IV AID (R2T4)

**Requires institution to contact a student prior to making a late or post-withdrawal disbursement of loan funds **
**Requires institution to return funds no later than 45 days after the date that it determines the student has withdrawn**
**Provides that a student does not have to repay grant overpayments of $50 or less**

## 
ACG and National SMART Grants

**ACG and National SMART Grants**

## Rules and Regulations
Interim Final Regulations published on July 3, 2006
 Invitation to comment through August 17, 2006 for possible changes for 2007-2008
 Negotiated Rulemaking to begin in fall for 2008-2009 and beyond.
Watch for IFAP announcements

**Interim Final Regulations published on July 3, 2006**
*** *****Invitation to comment through August 17, 2006 for possible changes for 2007-2008**
** ****Negotiated Rulemaking to begin in fall for 2008-2009 and beyond.**
**Watch for IFAP announcements**

**Both Programs**

_**Authorization and Funding**_
**Funding for these programs is not subject to annual appropriations process: ****	**** **
**2006-07 -- $790 million**
**2007-08 -- $850 million**
**2008-09 -- $920 million**
**2009-10 -- $960 million**
**2010-11 -- $1.01 billion**
**If funding insufficient, ratable reduction.**
**No reduction for 2006-07**
**Funds not spent in one year are carried over to subsequent years.**

**Both Programs**

**Notes:**
Turning to Budget Reconciliation.  This slide shows a brief chronology.  The Conference Report passed the House by a narrow margin in December 212-206.  It passed the Senate in slightly different form by a vote of 51-50 with Vice President Cheney casting the deciding vote.  Since there were differences, it had to go back to the House who passed the Senate version on February 1 by an even narrower margin of    .  President Bush signed the bill into law on Wednesday, February 8, 2006.

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.

## Award Amounts
ACG – 
First Academic Year of student’s program of study
$750
Second Academic Year of student’s program of study 
$1,300
National SMART Grant –
Third and fourth academic year of undergraduate study 
$4,000 per year for each of 2 years 
   Note:  There will be second year ACG and both third and fourth year National SMART Grants in 2006-07.

**ACG – **
- First Academic Year of student’s program of study
**$750**
- Second Academic Year of student’s program of study** **
**$1,300**
**National SMART Grant –**
- Third and fourth academic year of undergraduate study
**$4,000 per year for each of 2 years **
-    Note:  There will be second year ACG and both third and fourth year National SMART Grants in 2006-07.

**Both Programs**

**Notes:**
Turning to Budget Reconciliation.  This slide shows a brief chronology.  The Conference Report passed the House by a narrow margin in December 212-206.  It passed the Senate in slightly different form by a vote of 51-50 with Vice President Cheney casting the deciding vote.  Since there were differences, it had to go back to the House who passed the Senate version on February 1 by an even narrower margin of    .  President Bush signed the bill into law on Wednesday, February 8, 2006.

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.

## U.S. Citizen
Federal Pell Grant recipient
First or second year student in a two or four year degree program
Full-time enrollment
No specific major required

**Federal Pell Grant recipient**
**First or second year student in a two or four year degree program**
**Full-time enrollment**
**No specific major required**

**Eligibility Requirements**** **

**ACG**

## Eligibility Requirements 
1st year students
May not have been previously enrolled in a program of undergraduate education
Have completed secondary school program of study after January 1, 2006 
2nd year students
Have completed secondary school program of study after January 1, 2005 
Have a 3.0 G.P.A. in an eligible program

**1****st**** year students**
- May not have been previously enrolled in a program of undergraduate education
- Have completed secondary school program of study after January 1, 2006** **
**2****nd**** year students**
- Have completed secondary school program of study after January 1, 2005
- Have a 3.0 G.P.A. in an eligible program

**ACG**

## Student must have completed a rigorous secondary school program of study

ED has outlined options to meet requirement in DCL GEN-06-08 and in the interim regulations

**ED has outlined options to meet requirement in DCL GEN-06-08 and in the interim regulations**

**Eligibility Requirements**

**ACG**

**Options for Rigorous Program**

**State Designated Program**
**State Submitted Program**
**An advanced or honors secondary school program established by a state and in existence for the 04-05 or 05-06 school year**
**State Scholars Initiative**

**ACG**

**Options for Rigorous Program**

**2.****	****A set of courses as outlined in the Secretary’s May 2 letter to states.**
**3.****	****Completion of at least two Advanced Placement courses with passing test score of 3 or two International Baccalaureate courses with passing test score of 4**

**ACG**

**Options for Rigorous Program**

**Courses Similar to State Scholars Initiative**
**4 years of English**
**3 years of math (Algebra I and above)**
**3 years of science (Bio, Chem, Physics)**
**3 years of social studies**
**1 year of a foreign language**

**ACG**

- Department notifies potentially eligible students of how to provide additional eligibility information.
- Student provides additional information on website or calls toll-free number.
- Department sends student responses to schools.

**Applicant Self-Identification Process**

**ACG**

**Documenting Rigorous Program**

**Institutions are responsible for determining the eligibility of students who ED reported as having self-identified eligibility.**
**On at least the standard(s) selected by the student.**
**Institutions are also able to identify eligible students based on records they have (e.g., high school transcripts, test scores).**

**ACG**

**Documenting Rigorous Program**

**Documentation from “cognizant authority” ****can be provided by –**
**The student**
**Directly from “cognizant authority”**
**Home schooled students, the parent or guardian is the cognizant authority**
**For transfer students, an institution may rely on another school’s determination that student completed a rigorous program.  **
**NSLDS will store the data**

**ACG**

**Grade Point Average**

**For second academic year ACG, student must have a GPA of at least 3.0 from the first academic year.**
**Only determined one time, prior to first disbursement of second academic year award.**
**Special rule for transfer student –**
**For student who transfers after completing first academic year, the new school must calculate GPA using the grades from all coursework accepted from prior schools. **

**ACG**

## U.S. Citizen
Pell Grant recipient for same payment period
Third or fourth year student in a four year degree program
Full-time enrollment in an eligible major
Cumulative 3.0 GPA on a 4.0 scale in student’s eligible program
No rigorous high school program required

**Pell Grant recipient for same payment period**
**Third or fourth year student in a four year degree program**
**Full-time enrollment in an eligible major**
**Cumulative 3.0 GPA on a 4.0 scale in student’s eligible program**
**No rigorous high school program required**

**Eligibility Requirements**

**SMART Grant**

## 
Computer Science
Engineering
Technology
Life Sciences

**Computer Science**
**Engineering**
**Technology**
**Life Sciences**

**Mathematics**
**Physical Sciences**
**Designated ****Foreign Languages **

**Identified by CIP* code in DCL GEN-06-06**
***Classification of Instructional Program**** **

- National SMART Major Fields of Study

**Major Fields of Study**

**SMART Grant**

## No student self-identification as in ACG
Institutions are responsible for reviewing records to identify all eligible students –
 ISIR for Pell Eligibility, Citizenship, and other Title IV eligibility requirements
 Academic Records for –
Eligible Major or, if available, intent
GPA
Fulltime Enrollment

**Institutions are responsible for reviewing records to identify all eligible students –**
** ****ISIR for Pell Eligibility, Citizenship, and other Title IV eligibility requirements**
** ****Academic Records for –**
**Eligible Major or, if available, intent**
**GPA**
**Fulltime Enrollment**

**Eligibility Determination**

**SMART Grant**

## Disbursements

Funds maintained and disbursed according to Title IV cash management rules.
Disbursements made on payment period basis.
If disbursement is for a cross-over payment period, Pell Grant and ACG/National SMART Grant must be assigned to same award year

**Funds maintained and disbursed according to Title IV cash management rules.**
**Disbursements made on payment period basis.**
**If disbursement is for a cross-over payment period, Pell Grant and ACG/National SMART Grant must be assigned to same award year**

**Both Programs**

## Disbursements

Student may not receive ACG or National SMART concurrently from more than one school 
ACG and National SMART must be received from same school from which Pell Grant is received

**Student *****may not***** receive ACG or National SMART concurrently from more than one school**** **
**ACG and National SMART *****must be***** received from same school from which Pell Grant is received**

**Both Programs**

## Need Based Grants

Total of EFC and all estimated financial aid cannot exceed cost of attendance
ACG and National SMART may not replace EFC in need equation
May reduce other aid, including FSEOG, to avoid an overaward.
May reduce ACG/National SMART award to avoid an overaward.
Special treatment of VA benefits
No overaward tolerance

**Total of EFC and all estimated financial aid *****cannot *****exceed cost of attendance**
**ACG and National SMART *****may not***** replace EFC in need equation**
**May reduce other aid, including FSEOG, to avoid an overaward.**
***May***** reduce ACG/National SMART award to avoid an overaward.**
**Special treatment of VA benefits**
**No overaward tolerance**

**Both Programs**

## Availability of Funds
Initial authorizations in GAPS and COD with Electronic Statements of Account (ESOA) on July 29, 2006.
Not like campus-based.
No institutional allocation,
Like Pell or Direct Loans

First draw downs from GAPS available first week of August 2006

Schools will receive separate authorization for each program

**Initial authorizations in GAPS and COD with Electronic Statements of Account (ESOA) on July 29, 2006.**
**Not like campus-based.**
**No institutional allocation,**
**Like Pell or Direct Loans**
**First draw downs from GAPS available first week of August 2006**
**Schools will receive separate authorization for each program**

**Both Programs**

## Reporting of Awards and Payments

  COD XML Common Record --
 Student name
 Student SSN
 Student date of birth
 Student citizenship
 Student grade level
 Award amount
 Disbursement amount

**  ****COD XML Common Record --**
** ****Student name**
** ****Student SSN**
** ****Student date of birth**
** ****Student citizenship**
** ****Student grade level**
** ****Award amount**
** ****Disbursement amount**

**Both Programs**

## Reporting of Awards and Payments

**For ACG – Eligibility Reason Code**
**State Designated Program: “01”**
**Six-digit ‘program code’ found on **
**On flat file**
**On FAA Access**
**On list posted to IFAP**
**AP/IB: “02”**
**List of Courses: “03”**
**For National SMART Grant**
**Major/CIP code**

**Both Programs**

## Questions