NASFAA’s Update: Inside the Beltway 1

Agenda Washington Political Climate Federal Budget Update President Obama’s College Affordability Plan Reauthorization Negotiated Rulemaking NASFAA Proactive Policy

Washington Political Climate

Washington Political Climate Partisanship, Brinkmanship, and “Blame Game” Deficit Reduction Budget Politics Dictating Policy Compromise = Bad word

Budget Update—Gov’t Shutdown Government shutdown—result of Congress failing to pass a spending bill for fiscal year (FY) 2014 by Oct. 1 Spending bill got caught up in larger partisan battles Shutdown will remain until Congress agrees on spending bill

Budget Update—Gov’t Shutdown What is the impact of the government shutdown on student financial aid? Very minimal, especially if shutdown is short-term No disruption to Pell, Direct Loans, campus-based programs Due to furloughed staff, customer service will likely see the greatest impact Furloughs at IRS could create problems with Data Retrieval Tool (DRT) and requests for tax transcripts

Budget Update—Sequestration Sequestration is a 10-year process Implemented 3/1/2013, Year 1 impact: 5 % across-the-board cut to FSEOG, FWS, TRIO, GEAR UP 6 % across-the-board cut to TEACH Grant Increase in Direct Loan origination fees Pell Grant was protected Years 2-10 cuts will be achieved through lower spending caps If we do have a CR, will likely be CR again. Imagine a family, reduce food budget and movie budget equally. Next year can eliminate movie altogether and keep food as is. $109 billion in savings each year.

Budget Update—Sequestration Pell Grant is not protected in years 2-10 Unless Congress passes a law to stop sequestration it will remain in effect

Budget Update—FY 14 Predictions It is likely that FY 2014 (award year 2014-15) will ultimately be funded by a year-long continuing resolution (CR) In this case, the student aid programs would likely see the same exact cuts they experienced in FY 2013 (award year 2013-14). Pell would also likely be protected. Repeating year 1

President Obama’s College Affordability Plan Plan announced in late August Three part: Paying for performance Promoting innovation and completion Ensuring that student debt remains affordable Key Feature: Prior to 2015 award year, develop a “college ratings system” that would “compare colleges with similar backgrounds as well as colleges that are improving their performance.” ED would be directed to involve key stakeholders in developing the metrics and to include measures related to access, affordability and outcomes The intent is that by 2018 an institution’s rating would be used to determine the amount of student aid they receive Not just campus-based presumably. Who knows how that will work? Ratings thing is most significant part

President Obama’s College Affordability Plan Other features of plan: “Race to the Top” for higher ed Reward colleges with a Pell “bonus” Strengthen Satisfactory Academic Progress (SAP) Encourage innovation in learning models (MOOCS, Prior Learning Assessment, Competency-based Learning) Make all borrowers eligible for Pay As You Earn (PAYE) & launch a campaign to raise awareness about eligibility and enrollment Not a lot of detail.

President Obama’s College Affordability Plan Odds of Implementation: Some features of the president’s plan would require congressional action, while others would not No Congressional Action Needed: Development of “ratings list” Campaign to enroll more students into PAYE Congressional Action Needed: Coupling a school’s rating to student aid eligibility The parts of the proposal that would require new funding or make changes to current programs

Reauthorization Higher Education Act reauthorization *should* occur in 2014; but that is very unlikely The process will definitely start, but there may not be a final bill NASFAA’s Reauthorization Task Force submitted recommendations to House and Senate Ed Committees Predictions about reauthorization? Likely will occur piecemeal and not in full for at least another couple of years Major subjects for debate are likely to be: student loans, innovative learning models (MOOCs, Prior-Learning Assessment, Competency- based Learning), consumer information

Negotiated Rulemaking: Gainful Employment September, 2013: first negotiating session Ongoing: negotiators continue conversations within topical sub-groups October 21-23: second (and last) negotiating session Prediction: no consensus Because of master calendar requirements, earliest possible effective date is July 1, 2015

Why is Proactive Policy Important?

NASFAA Proactive Policy Task Force on Student Loan Indebtedness Reimagining Aid Design & Delivery Task Force on Award Notification and Consumer Information & related consumer testing Consumer Testing of Award Letters Advocacy Pipeline

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