State Update November 7, 2011 Greensboro, North Carolina Steven E. Brooks Executive Director North Carolina State Education Assistance Authority

Topics for Today’s Update 1.Financial Literacy Initiative with Treasurer Cowell and Community College System 2.Preliminary Impact of Changes to State Grants, Changes to State Grants, and beyond 4.Information about your State Agencies, SEAA and CFI 5.Forgivable Loans for Education Service (NC FELS) 2

NC Community Colleges Financial Literacy Project NC Community Colleges NC Department of State Treasurer NC State Education Assistance Authority College Foundation of North Carolina 9 3

New Community College Financial Literacy Course Schools define rules Students take courses Counselors evaluate results Counselors provide assistance 4

Community College Financial Literacy Course Incorporate into required entrance counseling for new borrowers of federal and/or alternative loans Set up as a resource for all students to use either as stand-alone or as part of a formal course of study –Orientation –Within classes on financial literacy 5 How can campuses use this tool?

Community Colleges define the rules Password protected Control admin access Select courses to require Set grade requirements 6

Course Overview: Summary page First time visitors get “New Assignment” link Returning students can resume tests and track progress 7

Course Overview: Course content Available topics: Financial Health Budgets Checking/Savings Credit/Debit Cards Building Credit Choosing a bank Responsible borrowing College decides which mandatory, which optional Playback control 8

Course Overview: Course content - Budgets Budget tool helps student consider Income, expenses and resources Results indicating need for financial aid will display links to additional resources. Budgets can be reviewed online by counselors 9

Course Overview: Course content - Smart Borrower Students considering federal loans may link to the Smart Borrower for salary information and the impact of borrowing. 10

Course Results Available through Control Panel Admin Access to: Summary Reports Detailed Student Information Test Scores Budgets 11

Course Results: Detail Counselor can view individual student detail information. 12

More course features: Link to USED Entrance/Exit Counseling Links will be provided to entrance and exit counseling for those students applying for federal loans or leaving school Features: 13

More to come … beginning this January Individualized Counseling State Treasurer Janet Cowell Establishing a statewide network of counselors Help students who do not understand material the campuses require Students who have failed entrance counseling requirements can thus obtain needed help before undertaking the obligation of a student loan 14

Impact of State Grant Changes (1) 49,847 students who received UNC Need Based Grants last year and who filed FAFSAs indicating plans to return to the same school in ,576 lost awards entirely 31,102 were eligible for awards of less than they had in ,169 either stayed the same or gained a small amount UNC Need Based Grant – impact of reduced funding and resulting formula change 15

Impact of State Grant Changes (2) North Carolina Legislative Tuition Grant (NCLTG) Budget reduction will affect students only in spring term of the academic year 31,000 students will see their spring term NCLTG reduced by approximately $230 each. Enrollment in the spring and refunds from campuses will be the determining factor in the precise loss. 16

Impact of State Grant Changes (3) State Contractual Scholarship Fund (SCSF) Since this is a campus based fund, we will not have data until after the spring term 2012 is completed. However, we will see a 12% reduction in average scholarship funds per student or a 12% reduction in the number of recipients or, most likely, some combination of the two. So… –If average awards remain constant, then about 2,200 students would lose these scholarships this year; –If the number of recipients remains constant, then just over 18,000 students will lose an average of about $300 each. (Note that most will have also lost the additional $230 from NCLTG) Campuses received $1,140 per FTE, not $1,350 17

Impact of State Grant Changes (4) North Carolina Student Incentive Grant This program was available to all sectors of higher education in North Carolina, public and private. It was a federal-state matching program; Congress eliminated the federal program and North Carolina consequently eliminated the state match. As a result, about 9,400 students lost an average of about $600 each. 18

Enjoying ? Glimpse the future! (1) Education Lottery Scholarship restricted to students for UNC and Community Colleges End of new originations in 8 current scholarship loan programs and beginning of NC FELS 9 semester limit on UNC NBG (and others?) Consolidate UNC Need Based and Community College Grant programs into new program? – more likely than No NCLTG and SCSF for NCICU campuses No Grants for Students Attending Certain Private Educational Institutions (CPEI) 19

Enjoying ? Glimpse the future! (2) North Carolina Need Based Scholarship (NC NBS) –North Carolina Independent Colleges and Universities –Certain Private Educational Institutions –Hospital authority owned or operated campuses and schools of nursing affiliated with NCICU institutions For “needy North Carolinians” Based on Federal Methodology EFC and UNC Costs of Attendance Detailed discussion and progress report will be held at 4:00 as part of the Independent Colleges Caucus 20

Issues affecting your state agencies 1.Back Office Services by CFI in collaboration with Financial Aid Services (FAS) 2.Direct Loan Servicing by CFI 3.Voluntary Flexible Agreement by SEAA 4.Recent Obama Administration proposal on split borrowers and “consolidation” loans 21

CFI to offer “Back Office Services” to campuses Requests for these services from many sources Board of Trustees approved last week Innovative collaboration with Financial Aid Services (FAS) of Atlanta, Georgia Designed to help financial aid administrators do your jobs more efficiently and effectively –In era of increased demand and insufficient staff resources –Less costly than hiring more staff Take away the “bad cop” role - free campus do job one – helping students fulfill educational dreams Details coming soon from CFI 22

CFI to Service Federal Direct Loans College Foundation has been approved by the Department of Education as a not-for-profit entity eligible to service federal assets, which will include Direct Loans. Though the target date they have been assigned by the Department is still almost a year away (October 2012), CFI already has an internal implementation team hard at work on a new loan servicing model. Certainly CFI has years of experience providing personal service for North Carolina students and schools, but, as a federal contractor, they will serve borrowers from across the U.S. as allocated to them by the Department. 23

Voluntary Flexible Agreement with USED SEAA submitted two proposals for “Voluntary Flexible Agreements” with the US Department of Education on August 1 Proposals center on services that have traditionally been provided – collections of defaulted loans, prevention of defaults, outreach, and lender reviews –One in collaboration with 11 other states –One as a North Carolina-only proposal –Congressional support – all Members of Congress from NC, Senate and House, Republicans and Democrats Await written response from USED 24

“Split Borrowers” and New Consolidation Plan Remember that most borrowers won’t qualify – only “split borrowers” with both FFEL and Direct Loans Of those who do qualify, the “average” borrower will only save between $4 and $8 per month Borrowers with benefits from CFI loans and SEAA guarantee are likely to lose more than they “save” –they lose these benefits with the consolidation –SEAA default aversion – 2.9% versus 8.8% So the message to students needs to be to use caution and common sense CFI will help borrowers determine whether or not it is their best interests to consolidate 25

SEAA Training Update Continue to have significant turnout for our New Financial Aid Administrator training 41 participants last month in Raleigh Really fine and representative group from many institutions around the state Total trained in this series thus far: 642 (22 events) 26

North Carolina Forgivable Education Loan for Service (NC FELS) 2011 General Assembly enacted legislation that merged multiple state programs into a single new program – FELS Provides forgivable loans to qualified North Carolina residents who commit to working in North Carolina in specified high need areas FELS recipients will sign a promissory note agreeing to work in North Carolina in their approved fields of study –Note will provide forgiveness of debt, one year for each year worked, in exchange for specified employment –Loan recipients who choose not to fulfill the career service obligation are obliged to repay loans in cash at interest rates higher than unsubsidized federal loans 27

Forgivable Education Loan for Service (NC FELS) With creation of FELS, the following programs will cease funding new students beginning –Nurse Educators of Tomorrow Program –Nurse Education Scholarship Loan Program –Nurse Scholars & Masters Nurse Scholars Programs –Board of Governors’ Medical & Dental Scholarship Loan Programs –Prospective Teacher Scholarship Loan Program –Student Loan Program for Health Science & Mathematics –Millennium Teacher Scholarship Loan Program Continuing students who have received loans from the above programs and who meet eligibility requirements for renewal will continue to be funded under terms of their existing promissory notes You will use school portal to indicate their eligibility for loans under existing promissory notes 28

Forgivable Education Loan for Service (NC FELS) Full FELS program details and qualifying disciplines will be posted on CFNC.org/FELS in December Please update your publications and websites NOW to remove references to the discontinued programs and to share the FELS information with interested parties You will want to provide some reassurance to continuing students who are currently borrowing from one of the discontinued programs – they will be grandfathered as described earlier, so long as they maintain continuous enrollment and program eligibility Note: we will NOT enforce requirements of continuing “need” for those discontinued programs that were previously for needy students only 29

Questions? 30