HEA Reauthorization: Looking for Direction 2005 MASFAP Fall Conference The Lodge of the Four Seasons Presenter: Laurie Wolf Des Moines Area Community College

Higher Education Act of 1965 “An Act to strengthen the educational resources of our colleges and universities and to provide financial assistance for students in postsecondary and higher education.” Lyndon B. Johnson January 4, 1965

Time Line

Environment War War Economy Economy Budget Cuts Budget Cuts ‘No Child Left Behind’ Themes ‘No Child Left Behind’ Themes  Accessibility  Affordability  Accountability  Quality

Environment (cont.) Supreme Court Appointments Supreme Court Appointments Hurricane Katrina Hurricane Katrina Hurricane Rita Hurricane Rita Legislator Scandals Legislator Scandals Partisanship

Activity to Date NASFAA recommendations NASFAA recommendations Hearings Hearings Testimony to Committees Testimony to Committees White Papers White Papers Introduction of Bills Introduction of Bills HELP Committees Bills Approved HELP Committees Bills Approved House Markup (H.R. 609) – July 22 House Markup (H.R. 609) – July 22 Senate Markup (S. 1614) – September 8 Senate Markup (S. 1614) – September 8 Three month extension Three month extension

Normal Next Steps Floor Consideration – House Floor Consideration – House Floor Consideration – Senate Floor Consideration – Senate Conference Committees Conference Committees Review and Debate of Conference Report Review and Debate of Conference Report Send to the President for Approval Send to the President for Approval Regulatory Process/Negotiated Rulemaking Regulatory Process/Negotiated Rulemaking

What’s in the Bills?

Pell Grant HOUSE Increase max awards to $6,000 for Increase max awards to $6,000 for Year-round Grants Year-round Grants 18 semester eligibility 18 semester eligibility Repeals Pell Grant “tuition sensitivity” requirement Repeals Pell Grant “tuition sensitivity” requirementSENATE Decreases max award to $5,100 for ; provides for a $300 per year increase for the next four years. Decreases max award to $5,100 for ; provides for a $300 per year increase for the next four years. Year-round Grants Year-round Grants 18 semester limit 18 semester limit Current law: The authorized maximum award for was $5,800.

New Grant Program Proposals HOUSE Creates enhances Pell Grants Plus Creates enhances Pell Grants Plus Achievement Grants for State Scholars program that would provide a $1,000 bonus for Pell Grant eligible students who participate in the “State Scholars” program of study in high school. Achievement Grants for State Scholars program that would provide a $1,000 bonus for Pell Grant eligible students who participate in the “State Scholars” program of study in high school.SENATE Establishes Provisional Grant Assistance Program (ProGAP) Establishes Provisional Grant Assistance Program (ProGAP) Provides additional grants to Pell eligible students. Provides additional grants to Pell eligible students.

New Grant Program Proposals (cont.) HOUSE Math & Science Honors Scholarships Math & Science Honors Scholarships Competitive awards to students pursuing BA, MA, PhD in science and engineering. Competitive awards to students pursuing BA, MA, PhD in science and engineering. Loan forgiveness Loan forgivenessSENATE National SMART Grants National SMART Grants Provide up to $1,500 per year to Pell eligible students in their third or fourth year of study, who are majoring in math, science, engineering, or a foreign language critical to national security. Provide up to $1,500 per year to Pell eligible students in their third or fourth year of study, who are majoring in math, science, engineering, or a foreign language critical to national security.

Campus Based Aid Programs HOUSE Formula Formula Phases out base guarantees and creates “fair share” allocation process over 10 years Phases out base guarantees and creates “fair share” allocation process over 10 years SEOG SEOG Authorizes $799M for FY2006, and such funds as may be necessary for succeeding five years Authorizes $799M for FY2006, and such funds as may be necessary for succeeding five yearsSENATE Formula Formula Maintains current allocation formula Maintains current allocation formula SEOG SEOG Authorizes such funds as may be necessary for FY06 and succeeding five fiscal years Authorizes such funds as may be necessary for FY06 and succeeding five fiscal years

Campus Based Aid Programs (cont.) HOUSE Work-Study Work-Study Authorizes $1B for FY2006, and such funds as may be necessary for succeeding five years Authorizes $1B for FY2006, and such funds as may be necessary for succeeding five years Perkins Loan Perkins Loan Authorizes $250M for FY2006, and such funds as may be necessary for succeeding five years Authorizes $250M for FY2006, and such funds as may be necessary for succeeding five yearsSENATE Work-Study Work-Study Provides waiver for 7% community service requirement Provides waiver for 7% community service requirement Authorizes such funds as may be necessary for FY06 and succeeding five fiscal years Authorizes such funds as may be necessary for FY06 and succeeding five fiscal years Perkins Loan Perkins Loan Authorizes such funds as may be necessary for FY06 and succeeding five fiscal years Authorizes such funds as may be necessary for FY06 and succeeding five fiscal years

Perkins Loan Program HOUSE Increase annual limits: Increase annual limits: Undergraduates: $5,000 Undergraduates: $5,000 Graduates: $8,000 Graduates: $8,000 Increases aggregate limit: Increases aggregate limit: Undergraduate: $27,500 Undergraduate: $27,500 Graduate: $60,000 Graduate: $60,000SENATE Maintains current law Maintains current law

Stafford Loan Program HOUSE Borrowing Limits Increases undergraduate annual limits: Increases undergraduate annual limits: 1 st year: $3,500 1 st year: $3,500 2 nd year: $4,500 2 nd year: $4,500 Increases unsubsidized annual limits for graduates: $12,000 Increases unsubsidized annual limits for graduates: $12,000 SENATE SENATE Borrowing Limits Increases undergraduate annual limits: Increases undergraduate annual limits: 1 st year: $3,500 2 nd year: $4,500 Increases unsubsidized annual limits for graduates: $12,000 Increases unsubsidized annual limits for graduates: $12,000 No expansion to aggregate borrowing limits.

Origination Fees HOUSE Phases down borrower paid fees in Direct to 1%, but raises fee to 3% in 2006 prior to phase down Phases down borrower paid fees in Direct to 1%, but raises fee to 3% in 2006 prior to phase down Phases out 3% fee in FFEL by 2010 Phases out 3% fee in FFEL by 2010 Requires collection of 1% FFEL guarantee fee Requires collection of 1% FFEL guarantee feeSENATE Permits Secretary to set Direct fee from 1-3% Permits Secretary to set Direct fee from 1-3% Maintains current FFEL 3% fee Maintains current FFEL 3% fee Lenders retain ability to pay fee for borrowers Requires collection of 1% FFEL guarantee fee Requires collection of 1% FFEL guarantee fee

Interest Rates HOUSE Eliminates provision in current law that changes variable to fixed 6.8% after July 1, 2006 Eliminates provision in current law that changes variable to fixed 6.8% after July 1, 2006 Retains current variable rate capped at 8.25% Retains current variable rate capped at 8.25%SENATE Retains provision in current law that will convert the interest rate on Stafford and Consolidation loans to a fixed 6.8% after July 1, 2006 Retains provision in current law that will convert the interest rate on Stafford and Consolidation loans to a fixed 6.8% after July 1, 2006

Consolidated Loans HOUSE Allows borrowers to choose either fixed or variable rates Allows borrowers to choose either fixed or variable rates Rate capped at 8.25% Rate capped at 8.25% Permits ‘reconsolidation’ or refinancing for borrowers seeking income-contingent repayment or who are consolidating a defaulted loan Permits ‘reconsolidation’ or refinancing for borrowers seeking income-contingent repayment or who are consolidating a defaulted loanSENATE Retains current fixed interest rate, but increases the origination fee paid to 1% Retains current fixed interest rate, but increases the origination fee paid to 1% No provision for ‘reconsolidation’ or refinancing No provision for ‘reconsolidation’ or refinancing

Loan Disbursements HOUSE Reinstates expired provisions with low student loan default rates to allow them to waive the 30-day disbursement delay and to disburse loan proceeds in one disbursement to new students. Reinstates expired provisions with low student loan default rates to allow them to waive the 30-day disbursement delay and to disburse loan proceeds in one disbursement to new students.SENATE

Single Holder Rule HOUSE Repeals single holder rule but requires borrower to consult with current loan holder when consolidating Repeals single holder rule but requires borrower to consult with current loan holder when consolidatingSENATE Repeals single holder rule Repeals single holder rule

Loan Repayment and Forgiveness HOUSE Creates a new 2-year forbearance Creates a new 2-year forbearance Repeals ‘3-times rule” Repeals ‘3-times rule” Loan forgiveness for teachers Loan forgiveness for teachers Creates loan forgiveness for: nurses, early child- hood educators, math & science teachers Creates loan forgiveness for: nurses, early child- hood educators, math & science teachersSENATE Creates new loan forgiveness condition in Direct Loan program for public sector employees Creates new loan forgiveness condition in Direct Loan program for public sector employees

School As Lender HOUSE Clarifies only applies to Stafford loans for graduate and professional students Clarifies only applies to Stafford loans for graduate and professional students Requires use of all institutional revenue to be used for need-based aid Requires use of all institutional revenue to be used for need-based aid SENATE SENATE Imposes a moratorium on new schools; allows current schools to continue Imposes a moratorium on new schools; allows current schools to continue Requires use of all institutional revenue to be used for need-based grant aid Requires use of all institutional revenue to be used for need-based grant aid

Experimental Sites HOUSE Maintains experimental sites for the administration of federal student loans at institutions with successful programs Maintains experimental sites for the administration of federal student loans at institutions with successful programsSENATE Permits, but does not require, the Secretary the authority to continue successful experimental sites at participating institutions Permits, but does not require, the Secretary the authority to continue successful experimental sites at participating institutions

Needs Analysis HOUSE Expands ‘auto zero’ to families or students who receive benefits under certain mean-tested federal benefit programs Expands ‘auto zero’ to families or students who receive benefits under certain mean-tested federal benefit programs Creates new ‘EZ FAFSA’ Creates new ‘EZ FAFSA’ Increases income protection allowance to $3,000 for employed dependent students Increases income protection allowance to $3,000 for employed dependent studentsSENATE Expands ‘auto zero’ to families or students with adjusted gross income less than $20,000 Expands ‘auto zero’ to families or students with adjusted gross income less than $20,000 Creates new ‘EZ FAFSA’ Creates new ‘EZ FAFSA’ Increases income protection allowance to $3,000 for employed dependent students Increases income protection allowance to $3,000 for employed dependent students

Accreditation HOUSE Permits states to accredit institutions Permits states to accredit institutions Establishes new accreditation review standard Establishes new accreditation review standard Requires public disclosures of agency actions Requires public disclosures of agency actions Expands the due process provisions in current law Expands the due process provisions in current lawSENATE No provision on states accrediting institutions No provision on states accrediting institutions No provision on board of governance No provision on board of governance Requires public disclosures of agency actions Requires public disclosures of agency actions Expands the due process provisions in current law Expands the due process provisions in current law

Transfer of Credit HOUSE Requires institutions to have a transfer of credit policy and to make it publicly available Requires institutions to have a transfer of credit policy and to make it publicly available Must include a statement that the transfer of credit is not solely denied on the basis of the accrediting agency of the sending institution Must include a statement that the transfer of credit is not solely denied on the basis of the accrediting agency of the sending institutionSENATE Requires institutions to make public their transfer of credit policies Requires institutions to make public their transfer of credit policies Which must include (1) a statement that the transfer of credit is not solely denied based on the accrediting agency of the sending institution, and (2) a list of institutions with which the institution has a transfer articulation agreement

50% Rules on Distance Education HOUSE Repeals the 50% rule Repeals the 50% ruleSENATE Maintains the 50% rule Maintains the 50% rule

Definition of Institution HOUSE Creates a single definition. Creates a single definition.SENATE Maintains current law Maintains current law Two definitions of institutions for nonprofit and proprietary

Student Information Reporting Requirements HOUSE No similar provisions No similar provisionsSENATE Requires institutions to report on ‘student body diversity’, including information on the percentage of enrolled, full- time students who are (1) male, (2) female, (3) form a low-income background, and a self-identified member of a major racial or ethnic group Requires institutions to report on ‘student body diversity’, including information on the percentage of enrolled, full- time students who are (1) male, (2) female, (3) form a low-income background, and a self-identified member of a major racial or ethnic group

Alumni Reporting Requirements HOUSE No similar No similarSENATE Requires institutions to report to the Department information on employment placement of graduates and graduates that enroll in graduate education Requires institutions to report to the Department information on employment placement of graduates and graduates that enroll in graduate education

College Costs HOUSE Requires collection of additional information by the Department Requires collection of additional information by the Department Creates a College Affordability Index Creates a College Affordability Index Provisions for institutions who fail to comply Provisions for institutions who fail to complySENATE Requires the Department to collect and provide public information about costs of attendance Requires the Department to collect and provide public information about costs of attendance

Drug Offenses HOUSE Clarifies current law Clarifies current law Applies only to enrolled students who are receiving Title IV Aid and are convicted Applies only to enrolled students who are receiving Title IV Aid and are convictedSENATE Clarifies current law Clarifies current law Applies only to enrolled students who are receiving Title IV Aid and are convicted

Non-Student Aid Provisions HOUSE The sense of the Congress – universities ‘should facilitate the free and open exchange of ideas’ and that students should not be ‘discriminated against’ and should be ‘treated equally and fairly’ The sense of the Congress – universities ‘should facilitate the free and open exchange of ideas’ and that students should not be ‘discriminated against’ and should be ‘treated equally and fairly’SENATE No similar provision No similar provision

What’s Not STAR Proposal STAR Proposal Switching use of tax tables to an Income Protection Allowance (IPS) calculation to assess family contribution Switching use of tax tables to an Income Protection Allowance (IPS) calculation to assess family contribution Limited Return of Title IV changes Limited Return of Title IV changes Legislation is in state of flux – changes taking place behind the scenes.

What Should the Aid Community Be Doing? Track Bills Track Bills Be aware of SAVINGS RAIDINGS!!!!! Be aware of SAVINGS RAIDINGS!!!!! Research effects of proposed changes to your campus and students Research effects of proposed changes to your campus and students Get acquainted with members of your Congressional Delegation Get acquainted with members of your Congressional Delegation Watch for call for action from NASFAA, MASFAA and State Federal Issues contacts Watch for call for action from NASFAA, MASFAA and State Federal Issues contacts

Restore the Intent of HEA “An Act to strengthen the educational resources of our colleges and universities and to provide financial assistance for students in postsecondary and higher education.” Lyndon B. Johnson January 4, 1965