© 2015 NASFAA NASFAA Federal Update Megan McClean Coval 1

© 2015 NASFAA2 Agenda Washington Political Climate Federal Budget and Funding Update Action on Reauthorization NASFAA Influence Other Policy Updates: –Status of Perkins –Update on Recent Negotiated Rulemaking –Administration Announces Move to PPY –Student Aid Bill of Rights NASFAA Research Update Get Involved!

© 2015 NASFAA3 Washington Political Climate

© 2015 NASFAA4 Gridlock with minor issues disrupting entire process Leadership Turmoil in the House Partisanship Deficit Reduction Budget Politics Dictating Policy 2016 Election! Washington Political Climate

© 2015 NASFAA5 Congressional Approval Numbers

© 2015 NASFAA6 A Republican Congress & Higher Ed New faces on education committees Sen. Alexander’s HELP Committee –Focus on simplifying FAFSA and student aid –Eye on innovative higher ed models Tough battles over funding –New investments in student aid unlikely –Simplification should not equate to cuts Action towards burdensome regulations

© 2015 NASFAA7 Federal Budget & Funding Update

© 2015 NASFAA8 Budget and Appropriations 101: What Should Happen What should happen: But…Congress rarely follows this process: –Politics jam the gears, no punishment for not following order –Instead we more often than not see mechanisms that help to patch the inability to pass separate appropriation bills ➢ Continuing Resolution (CR) ➢ Omnibus President Signs Appropriations Bills Into Law by October 1 Appropriations Bills Pass House and Senate Full Appropriations Committee Approves Draft Bills Appropriations Subcommittees Draft Spending Bills Congress Passes Budget Resolutions President Proposes Budget

© 2015 NASFAA9 Student Aid and the Budget Funding for student aid falls into the Labor, Health, Human Services, and Education Appropriations Subcommittee (Labor-H) This is always a very complex bill because so many important programs share the same pot of funds Most student aid funds are “forward funded” meaning they fund the following award year –Ex: FY 2016 funds the 2016–17 award year

© 2015 NASFAA10 Obama FY16 Budget Request (AY ) Grants –Maximum Pell Grant of $5,915 –Continue to index Pell to inflation beyond FY17 Campus-Based Aid –Level fund FSEOG and FWS (FY 2015 levels) –Revise allocation formula to direct dollars to schools that enroll and graduate high number of Pell Grant students –Expand/Reform the Perkins Loan Program

© 2015 NASFAA11 Obama FY16 Budget Request Loans –Expand Paye As You Earn eligibility to all borrowers –Pay for this expansion by making modifications to PSLF Access and Affordability Proposals –America’s College Promise ($60 billion/10 yrs) –College Opportunity Bonus Program ($7 billion/10 years) ➢ Rewards colleges that enroll and graduate low-income students and encourage all colleges to improve

© 2015 NASFAA12 GOP FY16 Budget Resolutions Political documents, light on specific numbers Freeze maximum Pell Grant for next 10 years –House seeks to address the shortfall “targeting it to students who need the most assistance” Fair Value Accounting for student loans –$220+ billion cost increase over 10 years Reconciliation instruction to find an additional $1 billion in savings over next 10 years –Threat to in-school interest subsidy?

© 2015 NASFAA13 House Proposes Cuts to Aid Programs Eliminates mandatory funding for Pell –Cuts Pell by $89.3 billion Eliminates in-school interest subsidy on loans –Cuts $34.8 billion by shifting costs to students Eliminates public service loan forgiveness –Cuts $10.5 billion, again shifting costs to students Eliminates the PAYE expansion –Cuts $16.3 billion All told, $150 billion would be cut from student aid over 10 years

© 2015 NASFAA14 Senate Proposes Cuts to Aid Programs Eliminates mandatory funding for Pell –Cuts Pell by $89.3 billion Eliminates in-school interest subsidy on loans –Cuts $34.8 billion by shifting costs to students All told, $124 billion would be cut from student aid over 10 years

© 2015 NASFAA15 The Public Opposes Education Cuts Source: Pew Research Center for the People & the Press, October, 2012 Would you approve or disapprove of reducing federal funding for education as a way to reduce the size of the national debt?

© 2015 NASFAA16 Budget Update: Where did we end up? All 12 spending bills passed out of committee for first time since 2009 House passed 6 of 12 bills; Senate passed 0 of 12 Democrats blocked bills in the Senate to force negotiation on sequestration Confederate flag controversy halted bills in the House Because Congress could not agree on appropriations bills or spending levels, a Continuing Resolution (CR) was necessary. President Signs Appropriations Bills Into Law by October 1 Appropriations Bills Pass House and Senate Full Appropriations Committee Approves Draft Bills Appropriations Subcommittees Draft Spending Bills Congress Passes Budget Resolutions President Proposes Budget

© 2015 NASFAA17 Budget Update: Continuing Resolution Funds the government through December 11, 2015 at levels identical to FY To comply with budget caps under sequestration, the CR includes a small across-the-board cut of % with virtually no impact to student aid programs.

© 2015 NASFAA18 Budget Update: Bipartisan Budget Act Close to midnight on Oct. 26, congressional leaders and the President Obama unveiled the Bipartisan Budget Act, which… raises sequestration caps for FY 2016 and 2017; suspends the debt ceiling through March 15, 2017, at which time the debt limit will be set at the amount of debt outstanding on that day; and would give Congress until December 11 to pass an omnibus appropriation measure that allocates the spending authority among the various Departments and programs in the federal government.

© 2015 NASFAA19 Budget Update: Bipartisan Budget Act The BBA also includes 1 relevant non-budget related policy item: –The Telephone Consumer Protection Act would be amended to authorize the use of automated telephone equipment to call cellular telephones for the purpose of collecting debts owed to or guaranteed by the United States government, which would include loan servicing and debt collection.

© 2015 NASFAA20 Budget Update: What’s Next? The House and Senate will consider the Bipartisan Budget Act before the November 3 debt ceiling deadline. If passed, putting budget battles and debt ceiling debates off until 2017 should improve the productivity of Congress.

© 2015 NASFAA21 HEA Reauthorization

© 2015 NASFAA22 Reauthorization Theme: Hurry Up and Wait! Technically supposed to occur in 2014, but automatically extended for one year NASFAA's Reauthorization Task Force submitted recommendations to House and Senate Ed Committees Glimmer of hope: strong bipartisan passage of ESEA bill in the Senate in early summer hopefully paves the way for productive law-making on HEA Movement beyond committee work unlikely

© 2015 NASFAA23 Reauthorization: Existing Legislation 1.Bipartisan Senate bill from Sen. Alexander (R-TN) and Sen. Bennet (D-CO) 2.Democratic Senate bill at the end of the 113 th Congress from outgoing chairman Sen. Harkin (D-IA) 3.Three bills from the House education committee that passed the full House last Congress

© 2015 NASFAA24 Broad Themes: Simplification; Affordability; Accountability; Transparency Specific Proposals: Prior Prior Year Year-Round Pell Simplification (Application & Repayment) Improvement of loan counseling Authority to limit loans One grant/one loan Reauthorization: Emerging Themes

© 2015 NASFAA25 House and Senate working behind the scenes to build out ideas and concepts from initial drafts –Chairman Alexander released a set of White Papers further outlining his ideas How will the pending exits of key players impact the process? –Boehner (Oct.), Duncan (Dec.), and Kline (Jan. ’17) May see some movement (new or amended bills) this fall, but unlikely to see final a reauthorization bill that clears both chambers of Congress before 2016 election Reauthorization: What’s Next?

© 2015 NASFAA26 Influence on Legislation

© 2015 NASFAA27 NASFAA Policy Recommendations/Task Force Legislative and/or Executive Action Year-Round Pell / “Pell Well” Recommended by original RTF Recommended in Gates RADD Project Sen. Maize Hirono, Pell Grant Protection Act Sens. Alexander/Bennett, bipartisan Financial Aid Simplification and Transparency (FAST) Act Sen. Harkin, Higher Education Affordability Act Proposals --  Draft Legislation!

© 2015 NASFAA28 NASFAA Policy Recommendations/Task Force Legislative and/or Executive Action Authority to limit loan amounts Recommended in original RTF Recommended by Task Force on Student Indebtedness Recommended in RADD Sens. Alexander/Bennett, bipartisan Financial Aid Simplification and Transparency (FAST) Act Proposals --  Draft Legislation!

© 2015 NASFAA29 NASFAA Policy Recommendations/Task Force Legislative and/or Executive Action Servicing Issues Task Force Develop a central loan portal Remove servicer branding Standard policies and procedures manual Improve counseling (make more efficient, etc) Student Aid Bill of Rights (Obama Administration) Proposals --  Draft Legislation!

© 2015 NASFAA30 NASFAA Policy Recommendations/Task Force Legislative and/or Executive Action Campus-based Allocation Task Force Remove base guarantee, fund solely on fair share Sen. Harkin, Higher Education Affordability Act Proposals --  Draft Legislation!

© 2015 NASFAA31 Perkins Loans Authorized through September 30, 2015 –No Federal Capital Contribution (FCC) since FY 2005 –No cancellation reimbursements since FY 2010 Bipartisan congressional efforts to save the Perkins Loan Program failed on September 30, so the program is no longer authorized. –Higher Education Extension Act, which extends Perkins, passed the House unanimously –Sen. Alexander (R-TN) blocked its consideration in the Senate because of his focus on simplification and the “One Grant, One Loan” model

© 2015 NASFAA32 Perkins Loans NASFAA advocated for the program on Capitol Hill, but will now shift focus to ensuring a smooth and equitable close- out of the program, though some advocacy continues on the Hill for a one-year extension. NASFAA’s RTF offered the following recommendations in the event the program would expire: ➢ Instruct the Secretary of Education to offset the amount of FCC to be returned to the federal government by the aggregate amount of unfunded reimbursement for cancellations ➢ Ensure that institutional contributions made in excess of the minimum required or made when there was no new FCC are also offset so that the amount due to the federal government is not overestimated

© 2015 NASFAA33 Perkins Loans ED release stated that if schools make first disbursements prior to October 1, 2015, then they are allowed to make subsequent disbursements for the remainder of award year –Early Feb. ED issued DCL GEN –Make loans to certain students through September 30, 2020 to enable students who received loans for award years that end prior to October 1, 2015 to complete their studies.

© 2015 NASFAA34 Perkins Loans Grandfathering Schools may make new Perkins Loan disbursements if the student: –Received at least one disbursement on or before June 30, 2015 –Is enrolled at the same institution as the last Perkins disbursement –Is enrolled in the same academic program –Is awarded Subsidized Direct Loan eligibility

© 2015 NASFAA35 Perkins Loans Grandfathering Expires Sept. 30, 2020 Only applies to awards from or earlier May increase awards amounts for , provided at least one disbursement made prior to Oct. 1, 2015 Additional guidance coming regarding assignments and revolving funds

© 2015 NASFAA36 ED published two new rules on October 27: REPAYE Cash Management More details to come! Stay tuned to Today’s News for updates from NASFAA’s Policy & Federal Relations Team. Just In: Final Rules

© 2015 NASFAA37 White House: Move to PPY On September 14, 2015, President Obama announced action to implement PPY on the 2016 FAFSA for AY Immediately following the President’s announcement, NASFAA announced its intention to form a PPY implementation task force to ensure a smooth transition for financial aid offices nationwide Further guidance will continue to flow from the Department of Education in the coming months.

© 2015 NASFAA38 NASFAA Research Update Collaboration with the Association for the Study of Higher Education –Examining how to make scholarly research more relevant to practitioners –Report Release in late 2015 Staffing and Salary Models Update –NASFAA distributed our new “Benchmarking Survey" (formerly Staffing Survey and Salary Survey) –Report release in Winter 2015 along with updated Staffing and Salary Models website The Journal of Student Financial Aid is working on a Special Edition focused on the reauthorization of the Higher Education Act –Publication date: November 2015 Study on Consumer Information and Law Student Indebtedness –NASFAA received a grant from Access Group to conduct a 17-month study on consumer information for graduate-professional students, with a specific focus on law students –Reports will be released throughout 2016

© 2015 NASFAA39 Past Reauthorization Task Force Reimagining Aid Design and Delivery (RADD) Task Force Task Force on Student Loan Indebtedness Task Force on Public Service Loan Forgiveness Task Force on Campus-Based Allocations Task Force on Consumer Information Task Force on Loan Servicing Task Force on R2T4 Task Force on Innovative Learning Models Task Force on Benchmarking Policy Task Forces Existing One Grant/One Loan Task Force Task Force on Graduate Specific Financial Aid Data PPY Implementation Task Force Dynamic Loan Limit Working Group Future More to come!

© 2015 NASFAA40 You Can Advocate, Too! Join a task force! Write a letter! Visit with your member of Congress, either locally, or in DC! For more information, visit: or

© 2014 NASFAA‹#›