Federal Update SESSION GS1 Lynn Mahaffie and Jeff Baker |November 28, 2016 U.S. Department of Education 2016 FSA Training Conference for Financial Aid Professionals

OPE Overview Borrower Defense Pell Eligibility Reinstatement Teacher Preparation State Authorization Revised Pay As You Earn (REPAYE) Strengthening Accreditation Servicemember Civil Relief Act (SCRA)

Borrower Defense

Borrower Defense Negotiated Rulemaking: January, February, March 2016 No consensus, but ED took the Committee’s feedback into account when drafting the proposed regulations NPRM Published, June 16, 2016 45-day comment period – ended August 1, 2016 Received over 10,000 comments representing more than 50,000 parties Final Regulations Published, November 1, 2016

Borrower Defense Builds on ED’s commitment to protect students’ and taxpayers’ investments Provides additional protection to borrowers and taxpayers against predatory and other harmful practices

Borrower Defense Clarifies when and how students can obtain loan forgiveness if defrauded or deceived by an institution Requires institutions to post a Letter of Credit if they engage in misconduct or exhibit signs of financial risk Requires for-profit schools in which students have poor loan outcomes to provide clear, plain-language warnings to prospective and current students, and to the public

Borrower Defense Makes it simpler for eligible students to receive a closed-school discharge Prohibits the use of mandatory pre-dispute arbitration clauses and class action waivers that deny students their day in court if they are wronged Creates a process for group loan discharges when whole groups of students have been subject to misconduct

Pell Eligibility Reinstatement

Pell Eligibility Reinstatement Pell Grant Eligibility Reinstatement (Lifetime Eligibility Used) ED restoring eligibility for students who received Pell Grant funds at schools that closed before the student completed their program ED exploring the operational changes required to implement this, but will not require an application

Teacher Preparation

Teacher Preparation Negotiations held in 2012 – No consensus NPRM published on December 3, 2014 Supplemental NPRM published April 1, 2016 Final regulations published October 31, 2016 Correction to effective dates published Nov. 17, 2016

Teacher Preparation Final Regulations: Establishes new regulations to implement requirements for the teacher preparation accountability system Amends regulations governing the TEACH Grant Program

State Authorization

State Authorization Negotiated held in 2014 — No consensus Notice of Proposed Rulemaking was published in the Federal Register on July 15, 2016 Public comment period closed on August 24, 2016 Received 139 comments Final Rule submitted for OMB review on November 4, 2016

State Authorization The proposed regulation would: Require an institution offering distance education to be authorized by each State in which the institution enrolls students, if such authorization is required by the State Define “State authorization reciprocity agreement” and provide that such an agreement could meet State authorization requirements for title IV purposes

State Authorization Require an institution to document the State process for resolving complaints from students enrolled in distance education programs Require an additional location or branch campus located in a foreign location be authorized by an appropriate government agency of that country Require disclosures specific to an institution’s distance education programs

Revised Pay As Your Earn (REPAYE)

Revised Pay As You Earn (REPAYE) Extends the 10% of monthly discretionary income payment cap to an additional 3 million Direct Loan student borrowers Forgives remaining debt after 20 years for those who borrowed only for undergraduate study and 25 years for those who borrowed for graduate study

REPAYE – Email Campaign Over 3 million borrowers were emailed from March-April, 2016 Cohorts: Delinquent In hardship deferment or forbearance Others

Strengthening Accreditation

Strengthening Accreditation In the recent past, some schools went bankrupt while continuing to be accredited by agencies that are supposed to be guarantors of quality and gatekeepers of billions of dollars in federal student aid This called for additional strengthening of the Department’s oversight of the accreditation system In November 2015, ED announced a set of actions to strengthen accreditation by increasing transparency and promoting outcomes-driven accountability

Strengthening Accreditation ED has been implementing these executive actions by: Publishing accreditors’ student achievement standards so the public can make comparison, to identify, for example the accreditors that have a standard for licensure pass rates and the necessary benchmarks Publishing a customized version of College Scorecard arranged by accreditor to help the public and NACIQI identify differences in institutional outcomes

Strengthening Accreditation Webinars to help accreditors understand what is available at the FSA data center Increasing the rigor of agency review for recognition Issuing a draft terminology and reporting guidance to increase the usefulness of information reported to the Department and shared with the public Establishing an Accreditation Steering Committee to improve coordination across various ED offices and externally with states, accreditors, and others

Servicemember Civil Relief Act (SCRA)

Servicemember Civil Relief Act On November 10, 2016 ED issued guidance to retroactively apply the Servicemember Civil Relief Act (SCRA) to FFEL Program loans obtained by servicemembers on or after August 14, 2008

Servicemember Civil Relief Act Guidance builds on previous efforts: August 2015 guidance authorized FFEL lenders to apply SCRA interest rate limitation to eligible servicemembers using DoD database (DMDC) May 2016 approval of new SCRA Interest Rate Limitation form for Direct Loan and FFEL programs to fulfill regulatory requirement April 2016 directive to retroactive apply SCRA

Servicemember Civil Relief Act The November 10 guidance: Encourages FFEL loan holders and servicers to retroactively adjust the balances of loans belonging to servicemembers who were in active duty status on or after August 14, 2008 Reimburses borrower for overpayment resulting from SCRA interest rate readjustment

Servicemember Civil Relief Act Describes methods used by ED that FFEL Program loan holders and servicers can replicate when making the retroactive adjustments Provides additional guidance for FFEL Program loan holders and servicers, particularly when servicemembers contest the information in the Defense Manpower Data Center (DMDC)

FSA Overview Default Rates Early FAFSA/Prior- Prior Pell Grant Payment Schedules Perkins Loan Program Cash Management Reporting Protecting Information Gainful Employment Other

FFEL/Direct FY ‘13 Cohort Default Rates

FY ‘13 Cohort Default Rates School Type School Type and Control FY ‘12 CDR FY ‘13 CDR Public – Two Year 19.1% 18.5% Public – Four Year 7.6% 7.3% Non-Profit – Two Year 16.1% 16.3% Non-Profit – Four Year 6.3% 6.5% For-Profit – Two Year 17.7% 14% For-Profit – Four Year 14.7% 18.6% Foreign 3.3% 3.6% All Schools 11.8% 12.1%

Early FAFSA/Prior – Prior

Early FAFSA President’s Announcement – FAFSA Start-Up on October 1 Use of Prior-Prior Income Data Beginning with the 2017-2018 FAFSA October 1, 2016 2015 Tax/Calendar Year for Income

Questions?

Prior-Prior and Early FAFSA Verification Use of DRT Will Reduce Selection for Verification Documentation of income/taxes from 2016-2017 can be used for 2017-2018 Eliminating Tracking Group V6 (Low Income)

Prior-Prior and Early FAFSA Conflicting Information Occurrences reduced if DRT used for both 2016-2017 and 2017-2018 FOTW warnings if 2017-2018 reporting income/taxes not equal to 2016-2017 reported amounts

Prior-Prior and Early FAFSA Conflicting Information – The CPS Will – Perform an automatic review to determine if there might be conflicting information between the two FAFSAs Flag for institutional resolution only those 2017-2018 ISIRs where the potential conflict, once resolved, would have a significant impact on the student’s 2017-2018 EFC

2017-2018 Pell Grant Payment Schedules

2017-2018 Pell Grant Program Payment Schedules – See DCL GEN-16-19 Maximum Award - $5,920 Increase from 2016-2017 - $105 Minimum Award - $595 Maximum eligible EFC – 5328 Payment Schedules – See DCL GEN-16-19

Perkins Loan Program (DCL GEN-16-05)

Perkins Loan Program Federal Perkins Loan Program Extension Act Extends program through September 30, 2017 Effectively eliminates the eligibility for graduate students to receive Perkins Loans. Receipt of Direct Loan requirements on the eligibility for undergraduates to receive a loan Subsequent disbursements can be made if first disbursement made prior to October 1, 2017  

Perkins Loan Program Federal Perkins Loan Program Extension Act of 2015 Requires return of federal share of revolving fund once no additional disbursements can be made – June 30, 2017 More information will be provided next year  

Perkins Loan Program Federal Perkins Loan Excess Liquid Capital (ELC) Not part of termination of the program Last year more than $190 million was returned Emails to > 600 schools on October 7, with link to “estimated” ELC based on last FISAP “Appeal” process was provided through October 25 Deadline to return the federal share was November 17 Follow-up letters next week with warning  

Cash Management

Cash Management Regulations October 30, 2015: Final regulations published July 1, 2016: Regulations effective Ensure that students receiving Title IV, HEA funds: Have convenient access to their funds Do not incur unreasonable financial account fees Are not led to believe they must open a particular financial account to receive their funds 46

Public Disclosures – Troubling Practices Contracts governing these accounts are often private; difficult for Federal agencies and consumer groups to analyze the student card marketplace Students do not have information about how much the accounts typically cost Some students receive inferior account terms because of lack of contract transparency; their school fails to negotiate on their behalf

Cash Management Regulations Institutions must by September 1, 2016 – Post on its public website any contract it has with an outside entity regarding Title IV credit balances Submit to the Department the URLs for the contracts for publication in an ED central database for public access Institutions must by September 1, 2017– Post on its public website data on the number of students and parents with financial accounts under a third-party arrangement and the mean and median annual costs to students and parents Submit to the Department the URLs for that data 48

Correct and Timely Reporting

Correct and Timely Reporting COD – Student’s academic program information NSLDS – Enrollment, including academic program Revised NSLDS Enrollment Reporting Guide posted on November 22 GE Reporting – October 1 following end of award year

Protecting Student Information

Protecting Student Information Under various Federal and state laws and other authorities, including the HEA; FERPA; the Privacy Act of 1974; the Gramm-Leach-Bliley Act; state data breach and privacy laws; institutions may be responsible for losses, fines and penalties - including possible criminal penalties - caused by data breaches.

Protecting Student Information DCLs GEN-15-18 and GEN-16-12 Reminds institutions (and their third-party servicers) of their continuing obligations to protect data used in all aspects of the administration of the Title IV Federal student financial aid programs.

Protecting Student Information The SAIG Enrollment Agreement includes a provision that the institution – Must ensure that all Federal Student Aid applicant information is protected from access by or disclosure to unauthorized personnel.

Gainful Employment See DCL GEN-15-12

Gainful Employment The HEA provides that to be Title IV eligible an educational program must: Be offered by a public or non-profit institution and leads to a degree; or Prepare students for gainful employment in a recognized occupation.

Gainful Employment Final rules published on October 31, 2014 Rules became effective July 1, 2015 Published Dear Colleague Letter GEN-15-12 summarizing the rules

Gainful Employment Debt-to-earnings (D/E) rates Annual Earnings D/E rate = annual debt burden divided by median annual earnings Discretionary Income D/E rate = annual debt burden divided by discretionary median annual income Discretionary annual income = median annual income less 150% of poverty line income

Gainful Employment Pass: Annual D/E < = 8%, or Discretionary D/E < = 20% Fail: Annual D/E > 12%, and Discretionary > 30% Zone: Annual D/E > 8% and < = 12% or Discretionary D/E > 20% and <= 30%

GE Results Program’s loses Title IV eligibility if: Fails in two out of three years; OR Fails or in the zone for four consecutive years

GE Reporting Report all Title IV Students by July 31, 2015 Report 2008–2009 through 2013–2014 award years Report following award years by October 1 Still time to report or correct for 2015-2016 Still time to correct earlier (or missing) reported data

GE Corrections and Challenges Draft GE Program Completer List Corrections Files sent to institutions on June 1 Corrections due by July 28 Draft GE Program D/E Rates Data Challenges Files sent to institutions on October 19 Challenges due by December 7

GE Disclosures Must disclose certain information on each GE program’s web page using ED provided disclosure template Updated each January, except Delay for upcoming disclosure while new template developed

Experimental Sites

Experimental Sites Pell for short-term career programs Pell for students with a bachelors degree Reduced Unsubsidized Loans FWS for High School Tutors Prior Learning Assessments Limited Direct Assessment

Experimental Sites Competency Based Education “Second Chance Pell” for incarcerated students Dual Enrollment – High school and postsecondary Additional Loan Counseling

Other Things

Other Things Direct Loan Servicer Phone Number Old Direct Loan Servicer (ACS) toll-free number now belongs to a private “debt-relief” company Public Service Loan Forgiveness (PSLF) Information on Audit Submission Timelines Upcoming Change to G-845 Process Confirm TG Numbers by December 9 FSA Feedback System

Sequestration – Iraq-Afghanistan Service Grant Other Things Sequestration – Iraq-Afghanistan Service Grant First disbursed on or after July 1, 2017 and before October 1, 2017 $5,920 6.90% $408.48 $5,511.52 First disbursed on or after October 1, 2017 and before July 1, 2018 FY 2018 (on or after October 1, 2017) sequester- related reduction percentages not yet determined

Thank You