Agenda Federal Budget Regulations At NACUBO

FY11 Continuing Resolutions Covers $5.7 billion Pell shortfall Keeps Pell maximum at $5,550 Eliminates year-round Pell for Cuts SEOG by $20M Eliminates funding for LEAP Defunds FY10 earmarks, none for FY11 Department of Education Cuts NIH by $260M (1%) Cuts NSF by $53M Cuts USDA by $126M Cuts NOAA by $119M Research

Pell Grant Funding Source: College Board, based on ED data

House HR 1 passed House 2/19/11 Cuts maximum Pell to $4,705 Eliminates SEOG Eliminates LEAP Eliminates Byrd Scholarships Eliminates 5 “strengthening” minority-serving institutions programs Eliminates Tech Prep state grants Reduces funding for HSIs and HBCUs Eliminates all earmarks for institutions Blocks “gainful employment” regulations

House FY12 Budget Resolution Sets spending “cap” for appropriators Rolls back Pell to pre-stimulus FY08 levels Pell max to $4,731 or Pell max to as low as $2,000

President’s FY12 Budget Keeps Pell at $5,550 Eliminates year-round Pell Eliminates in-school interest subsidies for grad/prof PLUS loans Offers up to 2% of loan balance to encourage borrowers with loans from more than one lender (FFEL and DL) to consolidate

President’s FY12 Budget Revives Perkins modernization proposal Sets interest rate at 6.8% Interest would accrue while in school Increases loan volume to $8.5 billion/year Increases participating institutions to 2,700 Same loan limits Awarded by school but loans made and serviced by ED Institutions with “solid college completion outcomes” rewarded

President’s FY12 Budget Level funding for FSEOG and FWSProposes new College Completion Incentive Grants Replaces TEACH grants with Presidential Teaching Fellows Eliminates LEAP, Byrd, Legal Assistance Loan Repayment Folds Tech Prep into CTE block grants

Recent Congressional Actions Post 9-11 Veterans Education Improvements Act Education Tax Benefits Red Flags Rule

Regulatory Issues Veterans Affairs Federal Trade Commission Internal Revenue Service Department of Education Health & Human Services

Post-9/11 Veterans Education Improvements Act Tuition and Fees Public institution = actual net in- state charges Private institution = max of $17,500 or actual net charges Living Allowance 50% for DL only DL and foreign based on ntl average Breaks don’t count Prorated based on credit hours Eligible Programs Expands to nondegree programs at non-IHLs Apprentice- ships and OJT Flight training

Post-9/11 Veterans Education Improvements Act Allocation of $17,500 across academic year Yellow Ribbon agreements due May 23 Timing of net charges calculation Concerns

VA Processes and Payments Quarterly meetings with VA officials Education Services Financial Services Debt Management VA Processes E-group join through My NACUBO

FTC: Red Flags Obtains or uses credit reports Reports to credit agencies Advances funds based on obligation to repay Revision to creditor definition January 1, 2011 FTC began enforcement

IRS: Information Reporting and Withholding Expanded 1099 reporting repealed Effective Jan 2012 Possible delay still in play 3% withholding by public institutions New Form 1099-K for 2011 Report payments to unrelated parties in settlement of payment card transactions Withholding if no valid TIN for merchant Payment cards

Education Tax Benefits American Opportunity Tax Credit Section 127 exclusion for employer-provided educational benefits Above-the-line deduction for college tuition Extended through 2012

ED: Program Integrity Rules  Ability to benefit  Agreements between institutions  Definition of credit hour  Gainful employment  High school diploma  Incentive compensation  Misrepresentation  Retaking coursework  R2T4 – term-based modules  R2T4 – taking attendance  Satisfactory academic progress  State authorization  Timely disbursement  Verification

State Authorization In home state (or others where physical location) –Authorized by name as educational inst May be exempt from approval or licensing –Authorized to conduct business Must be approved or licensed by name –Exemptions for religious, tribal, and federal institutions –State institutions presumed authorized States must have complaint mechanism

Distance Education Must be approved by any state that requires it if institution has students residing in that state Timing: applications completed by July 1 State Resources: hard to handle applications Cost: fees may add up Volatility: students move, states change rules Best resource is WICHE Compact for Education Technologies (WCET) wcet.wiche.edu/advance/state-approval

WCET Analysis of Distance Education Licensure Nearly all will need to apply It depends Few will need to apply

Fall Enrollment in For-Profits (Degree-granting Institutions)

Growth in For-Profit Education Source: Chronicle of Higher Education

Enrollment and Share of Federal Student Aid

Loan Usage and Debt Source: The Project on Student Debt

Lobbying Blitz

Gainful Employment Programs Most programs Proprietary schools Short-term vocational programs Nondegree programs that are at least a year in length Public and nonprofit institutions

Gainful Employment Final rules issued 10/29/10 Data on completers to ED Disclosures to prospective students Reporting and Disclosure Final rules issued 10/29/10 Notify ED 90 days before starting new program ED to advise inst of concerns, may deny New Programs Proposed rules 7/26/10; final rule pending Programs (not schools) could be restricted or ineligible based on student loan repayment data Restrictions and Sanctions

Repayment Rate Debt Burden Above 12% of total income AND Above 30% of discretionary income In between Below 8% of total income OR Below 20% of discretionary income Above 45%Fully eligible 35% to 45%Restricted Fully eligible Below 35%IneligibleRestrictedFully eligible

Incentive Compensation No more safe harborsED’s two-part test Is it a commission, bonus, or other incentive payment? Is it provided to any person or entity based directly or indirectly on success in securing enrollments or awarding financial aid?

HHS: Student Health Plans Could cover student and dependents Must be in connection with enrollment No pre-existing condition denials Preventative care without copayments No lifetime limits on essential benefits Student health plans as “individual health coverage” Prior to 9/23/12, $100,000 After 9/23/12, $2 million 2014 and beyond, no annual limit Phase-in of annual limits

Current NACUBO Projects ED Financial Responsibility StandardsGASB on Treatment of Pell Grant FundsStudent Financial Services BenchmarkingInternational Resource CenterThird-Party PaymentsCampus Environmental Resource Center

Questions? Contact: Anne Gross