2008 NJASFAA ANNUAL CONFERENCE Federal Update Jeff Baker Federal Student Aid U.S. Department of Education

2 Dependency Overrides

33 Students Seeking Dependency Overrides The Problem –  Some students who are likely eligible for a dependency override cannot find a school to consider an override at the time they need to submit a FAFSA.  Web FAFSA products to not allow a dependent student to submit without parental information.

44 Students Seeking Dependency Overrides The Solution –  Students who are unable to provide parental data will be able to submit their application through FOTW by indicating they believe that they have a special circumstance.  Application can be submitted for processing and all appropriate matches will be performed  No EFC will be calculated  These records will have a “special circumstances” flag.  School makes the determination after obtaining documentation.

5 Recent Legislation

6  Higher Education Reconciliation Act (HERA) – February 8, 2006  College Cost Reduction and Access Act (CCRAA) – September 7, 2007  Ensuring Continued Access to Student Loans Act of 2008 (ECASLA) – May 7, 2008  Extended by HR 6899  Higher Education Opportunity Act (Reauthorization) – August 14, 2008

7 Higher Education Opportunity Act

8  Higher Education Act of 1965 expired in  Reauthorized HEA after 16 extensions.  Signed by the President on August 14,  Became Public Law  Website:

9 HEOA - Pell Grants  Year Round Awards – Up to two full scheduled awards within on award year.  Effective with the award year.  Life-Time Limit - Limits the duration of a student’s eligibility to 18 semesters.  Effective with the award year  Changes the minimum Pell Grant award from a fixed $400 to ten percent of the appropriated maximum Pell Grant award.  Effective for the award year.

10 HEOA - Pell Grants  Provides a maximum Pell Grant award, regardless of calculated EFC, to any undergraduate student whose parent or guardian was a member of the Armed Forces and died in Iraq or Afghanistan after September 11,  Effective with the award year.

11 HEOA – Student Loans  Requires the Secretary to oversee private education loans made by FFEL lenders to students attending Title IV institutions.  Addresses lender and guaranty agency inducements.  Provides for more consumer information from lenders, guaranty agencies, schools, and ED.

12 HEOA – Student Loans  Changes Cohort Default Rate Calculation  From two years to three years  Transition Period  30% Penalty Rate  Increases “disbursement relief” CDR to 15%.  Effective October 1, 2011

13 HEOA – Student Loans  Changes to Disability Discharge Requirements  Expands loan forgiveness but only if Congress appropriates funds. Program would operate on a first- come, first-served basis.  Waiver of interest for military in combat zones.

14 HEOA – Student Loans  Removes VA Educational Benefits from Estimated Financial Assistance.  Also from “Resources” for campus- based aid.  Effective with the award year.

15 HEOA – Student Loans  Dependent students eligible for unsubsidized without parental FAFSA information.  Effective on enactment – August 14, 2008  Paper FAFSA or EDE Submission  Special process for Direct Loans

16 Perkins Loans  Increases annual and aggregate loan limits –  Annual $5,500 for undergrad  Annual $8,000 for grad  Aggregate $60,000 for grad  Aggregate $27,500 for upper division undergrad  $11,000 for all others Effective with the award year.

17 HEOA – Regulations Hearings  Texas Christian University, Fort Worth  University of Rhode Island, Providence  Johnson C. Smith College, Charlotte  Pepperdine University, Malibu  U.S. Department of Education, Washington  Cuyahoga Community College, Cleveland

18  Nov ’08 – Announcement of Formation of Committees and Solicitation of Nominations for Negotiators  Dec ’08 – Committees Established  Feb thru April ’09 – Negotiations  Aug ’09 – NPRM Published in the Federal Register  Nov ’09 – Final Rule Published  Jul ’10 – Rules Become Effective HEOA – Regulations

19 FFEL Loan Purchase Programs

20 Legal Authorities  Ensuring Continuing Access to Student Loans Act of 2008 (P.L )  HR 5715  Signed by the President on May 7, 2008  Strengthened GA Lender of Last Resort Program  Provided Secretary authority to purchase FFEL loans  Cannot provide advanced funding to lenders

21 Program Objectives  Ensure that eligible students and parents receive federal student loans for the academic year  Support the FFEL Program as a successful private/public partnership  Ensure no net cost to the federal government  No statutory authority to provide advance funding

22  Commitment by ED to purchase “participation interests” in eligible FFEL loans through September 30,  ED’s purchase will provide immediate liquidity.  To terminate ED’s participation interest lender repays ED with defined yield. Loan Participation Purchase Program

23 Loan Purchase Program  Commitment by ED to purchase eligible FFEL loans through September 30,  Any FFEL lender/holder  Loans must be fully disbursed to be purchased.  45 day advance notice of loans to be sold.  ED’s commitment has value in financial markets.

24 Where We Are Today  Academic Competitiveness and National SMART Grants  Increased FFEL and DL Loan Limits  Interest Rates  PLUS Loans  Need Analysis Formula/Dependency Test  Auto Zero EFC/Simplified Needs Test  Professional Judgment/Dependency Overrides

25 ACG and National SMART Grants  Eligible Non-Citizens Eligible  At least half-time enrollment  Students in certificate programs eligible, if program is at least one year in length and offered at a two or four-year degree granting institution.  Awards based on student’s grade level instead of “academic year”  Effective July 1, 2009 – by HEOA

26 Grade Level Base Amount Additional Unsubsidized 1 st -yr Dependent$3,500$2,000 2 nd -yr Dependent$4,500$2,000 Upper Division Dep.$5,500$2,000 1 st -yr Independent$3,500$6,000 2 nd -yr Independent$4,500$6,000 Upper Division Indep.$5,500$7,000 Graduate/Professional$8,500$12,000 FFEL/DL Annual Loan Limits

27 Interest Rates  Reduced interest rates on undergraduate subsidized loans only from current 6.8% to  6.0% for loans disbursed on or after 7/1/2008  5.6% for loans disbursed on or after 7/1/2009  4.5% for loans disbursed on or after 7/1/2010  3.4% for loans disbursed on or after 7/1/2011  Beginning 7/1/2012, rates revert to 6.8%  Unsubsidized Stafford Loans and all Staffords for graduate students remain at 6.8% fixed

28 PLUS Loans  Extenuating circumstances for adverse credit may include delinquency of up to 180 days on mortgage payments or on medical bill payments  Delayed repayment start date for parent PLUS borrowers at their option  Interest Rates (parents and students)  FFEL 8.5%  Direct Loans 7.9%

29 Need Analysis  Increases student income protection allowances  Excludes from specified list of untaxed income --  Welfare payments  Earned income credit amounts  Special fuel tax credit  Excluded foreign income  Untaxed Social Security Benefits  Effective for

30 Need Analysis  Excludes ‘special combat pay’ from income  Qualified education benefit (529 plan) owned by dependent student is an asset of the parent  Distributions from 529 plans excluded from other financial assistance  Effective for

31 Dependency Criteria  Independent student definition –  Is an orphan, in foster care, or a ward of the court, or was at any time when the student was is 13 years of age or older.  Is, or was, an emancipated minor or is in legal guardianship in the student’s state of legal residence.  Has been verified as an unaccompanied youth who is a homeless child or youth.  Effective for

32 Auto Zero EFC and SNT  Increases Auto Zero EFC income level from $20,000 to $30,000 (indexed to CPI)  Increases time from 12 to 24 months for receipt of means tested benefits  Adds Dislocated Worker in addition to type of tax return and means tested benefits  Effective for

33 Professional Judgment Dependency Overrides  Adds dislocated worker and homelessness as examples of when an FAA can use professional judgment  Provides that an FAA can use a dependency override made by another FAA within the same award year  Both effective for the award year

34 HEOA Implementation  FAFSA  Regulations   Dear Colleague Letters  Comprehensive Summary  Selected Topics  FSA Training  Institutional Data Reporting (NCES/IPEDS)

Regulations

Rulemaking  TEACH Grant  NPRM Published March 24, 2008  Final Rule Published June 23, 2008  Rules Effective July 1, 2008  Title IV Loan Programs  NPRM Published July 1, 2008  Comment Period Ends August 15, 2008  Final Rule Published October 23, 2008  Rules Effective July 1, 2009

TEACH Final  Effective for the award year.  Must be repaid as Direct Unsubsidized Loan if student does not –  Teach for at least four years within eight years of ceasing enrollment in the TEACH Grant eligible program, as a -  Highly Qualified Teacher  At a Title I school  In a specified subject area.  “In for a dollar, in for four years.”

TEACH Final  Up to $4,000 per year for first undergraduate or post-baccalaureate (non degree) program - $16,000 aggregate  Up to $4,000 per year for graduate student - $8,000 aggregate  Prorated amounts for less than full-time enrollment  Award, when combined with other assistance, cannot exceed cost of attendance (No EFC)

TEACH Final  TEACH Grant recipient must teach in a high-need field in the majority of classes taught.  “Other” high-need fields must be listed in the Department of Education’s Nationwide Listing of Teacher Shortage Areas at the time the recipient begins qualified teaching.

TEACH Final  Institutional Eligibility  See DCL GEN-08-07, posted to IFAP on June 3, 2008  Institutional Choice whether to participate  An institution that offers one or more TEACH Grant-eligible programs may participate in the TEACH Grant Program

TEACH Final  Funding, awards and disbursements much like Pell, ACG, and SMART  Does not matter which loan program school participates in (FFEL or Direct Loans)  Institution has no responsibility for tracking or for conversion of grant to loan  NSLDS and Direct Loan Servicing are the tracking mechanisms

42 TEACH Grant Statistics

Loans Final  Definition of Not-for-Profit Holder  FFEL Only  Income-based Repayment Plans  FFEL and Direct Loans  Public Service Loan Forgiveness  Direct Loan only  Economic Hardship and Military Service Deferments  FFEL, Direct Loans, and Perkins

44 Upcoming FSA Training  Federal Student Aid Conferences –  October , 2008  Hyatt Regency Dallas  Dallas, Texas  December 2-5, 2008  Paris/Bally's  Las Vegas, Nevada 

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