Federal Update KASFAA Spring Conference Bowling Green, Kentucky April 11-13, 2007 Presented by Greg Martin

Pell Grant Payment Schedules Maximum award is $4,310 Minimum award remains $400 Maximum Pell eligible EFC is 4110 Published in DCL P-07-01

Direct Grad-PLUS Loan Deferments Direct PLUS loans for grad./professional students will be placed into in-school deferment status based on enrollment reporting information –Students continuing at least ½ time enrollment automatically receive in-school deferments that remain in effect until completion date reported by school

Preferred Lenders Preferred Lenders Lists are allowed No Automatic Referrals Must process any loan request made by a student or parent regardless of lender –See GEN May not have unreasonable delays Publications, scripts and staff training should comply Violations could bring sanctions Does not apply to FFEL/Direct Loan choice

Preferred Lenders Preferred Lenders Lists are allowed No Automatic Referrals Must process any loan request made by a student or parent regardless of lender –See GEN May not have unreasonable delays Publications, scripts and staff training should comply Violations could bring sanctions Does not apply to FFEL/Direct Loan choice

Alternative Loans Alternative loans must be included as “estimated financial assistance” if enrollment is a condition for the loan –Does not matter where loan proceeds are sent or whether school certified enrollment –May replace EFC –Think about it like an outside scholarship

Training Opportunities Spring Training (ACG/SMART Grant) –West Virginia State University, Institute, WV (Charleston area) May 9, 2007 –Tennessee Tech University, Cookeville, TN June 5, 2007 –Univ. of Southern Indiana, Evansville, IN April 18, 2007 –Refer to DCL ANN for information and a link to the registration site

Training Opportunities R2T4 software training –On-line, instructor-led –Includes changes to the R2T4 calculation resulting from HERA –90 minute sessions –Refer to DCL ANN for registration information

Training Opportunities Applicant data resolution training –On-line, instructor led –Resolving student application data rejects and use Department’s web-based systems to correct errors –90 minute sessions –Refer to DCL ANN for registration information

Negotiated Rulemaking Four negotiating teams –Loans –ACG/National SMART –General Provisions –Accreditation

Negotiated Rulemaking – Loan Issues Entrance counseling for Grad PLUS Identity theft Use of preferred lenders Prohibited inducements Economic hardship Retention of disbursement records supporting MPNs

Negotiated Rulemaking – Loan Issues Certification of E-signatures on MPNs assigned to ED Use of true and exact copy of death certificates for death discharge Retroactive discharge for permanent ant totally disabled borrowers Lender NSLDS reporting timeframes

Negotiated Rulemaking – Perkins Loan Issues Assignment of defaulted loans Eligibility requirements for child and family service cancellation Definition of “reasonable and affordable” collection costs

Negotiated Rulemaking – ACG/National SMART Rigorous secondary school programs –Who defines rigor? Mandatory school participation in ACG/National SMART Requirement that Pell Grants and ACG/National SMART be disbursed at the same institution when awarded in the same term Academic year progression

Negotiated Rulemaking – ACG/National SMART Grade point average –Transfer students; coursework; timing of calculation; eligibility for disbursement Interpretation of previously enrolled –College credits earned while in high school; treatment of AP/IB credits Clarify meaning of successful completion of rigorous program of study means ED monitoring disbursements of student awards by academic year

Negotiated Rulemaking – General Provisions Consistent enrollment status definitions for all Title IV programs Consistent definitions of undergraduate and graduate student for all Title IV programs Define independent study Treatment of FFEL and DL funds when a student withdraws before beginning class – make consistent with other programs –Eliminate the single disbursement requirement for Perkins and FSEOG

Negotiated Rulemaking – General Provisions Nonstandard term and nonterm programs –Use of completion of half the weeks of instructional time for timing of loan disbursements; loan eligibility for nonstandard term programs; Require institutions to use consistent disbursement periods Cash Management –Recovery of stale dated checks; student/parent permission for electronic disbursements; Affirmative confirmation of a loan Eliminate requirement for written notification and student confirmation of a post-withdrawal disbursement of a grant made directly to student

Negotiated Rulemaking – General Provisions Allow standard term programs with monthly starts to use Pell Formula #1 Eliminate double pro ration for Pell Grant payments for clock and credit hour programs w/o terms Pro rate loans for remaining portion of a program by standard 50% instead of exact ratio Allow school to credit student’s account for minor prior year charges w/o authorization Allow school to certify a loan for a transfer student for remaining portion of loan not used a first school and then certify a new loan for the new academic year

Negotiate Rulemaking – Accreditation Due Process Substantive change Monitoring Measures of student achievement Transfer of credit/acceptance of credentials Definition of terms – direct assessment

Negotiated Rulemaking Information IFAP under Law & Regulation – select Negotiated Rulemaking for Higher Education –Select by team e.g., Accreditation Team –Obtain list of negotiators, draft agenda, summary of sessions –Print proposed regulatory language Informative “heads-up” as to what MAY be coming

Tentative Calendar Sessions: December 2006, February, March and April 2007 NPRM: June day comment period Final rules: November 1, 2007 Effective date June 1, 2008 with possible early implementation

Fiscal Year 2008 Budget Proposals

FY ’08 Title IV Budget Priorities Federal Pell Grant Increase maximum Pell Grant to $4,600 for and to $5,400 by Pell Grants available year-round at eligible 2 year and 4 year degree granting institutions Pell Grant eligibility limited to the equivalent of 16 semesters Eliminate the Pell Grant award rule related to tuition sensitivity

FY ’08 Title IV Budget Priorities ACG and National SMART Grants Increase Academic Competitiveness Grants (ACG) awards from – – $750 to $1,125 for first-year students – $1,300 to $1,950 for second-year students

FY ’08 Title IV Budget Priorities Eligibility/EFC Exclude amounts held by students and parents in 529 savings and investment accounts from the EFC formula Implement a consent-based approach to matching FAFSA data with Federal tax data –Lots more do be worked out –Pilot first –??? Award Year

FY ’08 Title IV Budget Priorities FFEL/Direct Loans Increase annual loan limits for upper division undergraduates from $5,500 to $7,500 Increase aggregate loan limits for all students – No amounts specified

FY ’08 Title IV Budget Priorities Funding for Increased Aid Eliminate new funding for – – FSEOG – Perkins Loan – LEAP Recall Federal share of Perkins Loan revolving fund and outstanding loan portfolio. – Details being evaluated

FY ’08 Title IV Budget Priorities Funding for Increased Aid lender fee from 0.5 percent to 1 percent Reduce interest subsidies to lenders by 0.5 percent (50 basis points) Reduce default insurance from 97 percent to 95 percent Reduce guaranty agency default collection payments Move guaranty agency account maintenance fees to a unit cost basis Increase consolidation.

FAFSA4caster!!! Announcing FAFSA4caster –Tool to help HS Juniors and their families prepare for college –Available April 1 Visit –See Electronic Announcement on March 21

Higher Education Reconciliation Act of 2005 (HERA)

FFEL and Direct Loans Loan limits in FFEL and Direct Loans: annual base limits increased for - - –First year students from $2,625 to $3,500 –Second year students from $3,500 to $4,500 Increases annual additional unsub for - - –Graduate students from $10,000 to $12,000 –Prep for grad program from $5,000 to $7,000 –Teacher certification from $5,000 to $7,000 Aggregate limits are not changed Effective for loans first disbursed on or after July 1, 2007

Calculation of EFC 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

Calculation of EFC Simplified Needs Test and Auto Zero EFC –Tax return alternative for parents or students that received, during the base year, benefits from a Federal means-tested program such as supplemental security income, food stamps, free an reduced school lunch, TANF and WIC

Calculation of EFC Active Duty Military –Adds active duty military to the criteria that makes a student independent Action: Dependency Override 529 Tuition Savings Plans –Treats all 529 Pre-Paid and Tuition Savings Plans as assets of the owner, unless the owner is the dependent student Action: Update assets / do not include as EFA Small Businesses –Excludes small-businesses from assets Action: Update Assets

Calculation of EFC Income Protection Allowance –Dependent student increased to $3,000 –Independent students w/o dependents other than a spouse increased to $6,050 Applies to single student and married student with both spouses enrolled –Independent Students w/o dependents other than a spouse increased to $9,700 Applies to a married student where only one spouse is enrolled –Independent students with dependents other than a spouse IPA table increased by 5% for

Calculation of EFC Asset assessment rates decreased –Independent students w/o dependents other than a spouse Reduces asset contribution rate from 35% to 20% –Independent students with dependents other than a spouse Reduces asset contribution from 12% to 7% –Dependent students Reduces asset contribution from 35% to 20%

New Grant Programs Academic Competitiveness Grant (ACG) National Science and mathematics to Retain Talent Grant (National SMART Grant)

Authorization and Funding Funding for these programs is not subject to the annual appropriations process – $790 million – $850 million – $920 million – $960 million – $1.01 billion

Rules and Regulations Interim Final Regulations for the award year published on July 3, 2006 –Invitation to comment through August 17, 2006 for possible changes for –Received 80 comments Final Regulations for the award year and beyond published on November 1, 2006 –Institutions may implement changes made in the Final Regulation for the award year

Rules and Regulations One Significant Change –July 3 interim rule required student to have received a Pell Grant in the same payment period (e.g., term) to receive an ACG or National SMART Grant –November 1 final rule requires student to have received a Pell Grant sometime in the same award year to receive an ACG or National SMART Grant

Institutional Responsibility Institutions are responsible for implementing the new programs within the guidance provided The Secretary recognizes that institutions face significant challenges in implementing the programs with almost no lead time for the award year These facts will be considered during reviews of the institution’s implementation of the programs

Programs Are Similar in Some Ways Student Eligibility U.S. Citizen Only – Eligible Non-Citizens Do Not Qualify Pell Grant Recipient During Same Award Year Full-time Enrollment for Payment Period Enrolled in Degree Program Progression by Student Academic Year Only One Scheduled Award for Each Academic Year

ACGNational SMART 1 st & 2 nd academic years of a two or four year degree program. 3 rd & 4 th academic years of a four year degree program. Requires completion of rigorous high school program of study. Requires student to be in a designated major. 1 st Academic Year- $ nd Academic Year- $ rd Academic Year- $ th Academic Year- $4,000 GPA of at least 3.0 as of the end of 1 st academic year only. GPA of at least 3.0 at each disbursement.

Duration of Student Eligibility For ACG, students are restricted to: –One grant for the student’s first academic year. –One grant for the student’s second academic year. For National SMART Grant, students are restricted to: –One grant for each of the student’s third and fourth academic years.

ACG Eligibility Requirements 1 st year students –May not have been previously enrolled while in high school as a regular student in an ACG eligible program. –Have completed a rigorous secondary school program of study after January 1, nd year students –Have completed a rigorous secondary school program of study after January 1, –Have a 3.0 or higher GPA at the end of 1 st year.

ACG: Options for Rigorous Program 1.State Designated Program –  State Submitted Program.  An advanced or honors program established by a state and in existence for the or school year.  State Scholars Initiative (SSI) Programs.

ACG: Options for Rigorous Program 2.A set of courses as outlined in the final regulations. 3.Completion of at least two Advanced Placement (AP) courses with passing test score of 3 or two International Baccalaureate (IB) courses with passing test score of 4.

ACG: Options for Rigorous Program Set of Courses 4 years of English. 3 years of math – – Two of which must be algebra I and above. 3 years of science – – Two of which must be biology, chemistry, or physics. 3 years of social studies. 1 year of a language other than English.

ACG: Documenting Rigorous Program Institutions are responsible for determining the eligibility of students who self-identified on at least the standard(s) selected by the student. Institutions are encouraged to identify all eligible students based on records they have (e.g., high school transcripts, test scores). Institutions are also responsible for determining eligibility if student informs the institution directly.

ACG: Documenting Rigorous Program Documentation from cognizant authority. –For 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, student must have a cumulative Grade Point Average (GPA) of at least 3.0 from the first academic year. –GPA determined one time, after completion of first academic year. For a student who transfers after completing first academic year, the new institution must calculate GPA using the grades from all coursework accepted from prior schools.

 Computer Science  Engineering  Technology  Life Sciences  Mathematics  Physical Sciences  Designated Critical Foreign Languages Identified by CIP* code in DCLs GEN and GEN *Classification of Instructional Program National SMART Grant Major Fields of Study

Requires that a recipient – –Declare an eligible major; or –Show intent to declare eligible major if school policy does not yet allow a major to be declared. Institution must have a process for monitoring that student is making progress toward completion of the program with that eligible major. National SMART Grant Major Fields of Study

National SMART Grant Grade Point Average For each payment period, a student must have a cumulative grade point average (GPA) of at least 3.0 that: –Includes all coursework required for degree in approved major. –Is calculated through last completed payment period. –Is reviewed prior to each disbursement.

Both Programs Need-Based Grants Total of ACG/National SMART Grant, EFC, Pell, and all estimated financial aid cannot exceed cost of attendance. –ACG and National SMART Grant may not replace EFC in need equation. –To avoid an overaward, an institution may reduce other aid, including FSEOG, or it may reduce the ACG or National SMART Grant.

Both Programs Determining Enrollment Status Schools must have the same policy for determining enrollment status for Pell Grants and for ACGs and National SMART Grants. Schools must use same recalculation policy, such as recalculation date (census date), that is used for Pell Grants.

Both Programs Academic Year Student’s progress and duration of eligibility in an eligible program is measured in Title IV academic years. A Title IV academic year is defined in the HEA to be – A minimum of either: Twenty-four semester credit hours, or Thirty-six quarter credit hours, or 900 clock hours. --AND— A minimum of 30 weeks of instructional time (26 weeks for clock hour programs).

Second and Fourth Academic Year For the and Award Years – For a student enrolled in an associate’s degree program, the second academic year ends when the student has completed the program. For a student enrolled in a bachelor’s degree program, the fourth academic year ends when the student has completed the program. See DCL GEN-06-18

For the and award years, an institution with a 30 week academic year and standard terms ( Formula 1) may –  Determine the actual number of weeks of instructional time that were included for the student to complete the number of credit hours in the institution’s Title IV academic year definition.  Assume that there were 30 weeks of instructional time for each increment of credit hours that comprises the institution’s Title IV academic year definition. - OR - Academic Year - Weeks of Instruction

Academic Year – Weeks of Instruction May exercise option – On a student by student basis. For same student for different terms. For transfer credits differently than for home earned credits. NOTE: An institution must determine the actual number of weeks of instructional time for a student who requests that such a determination be made or questions whether he or she has completed an academic year. See DCL GEN-06-18

Comments regarding these materials or my performance should be directed to: Jo Ann Borel