1. Federal Update SESSION GS1
Lynn Mahaffie and Jeff Baker |November 28, 2016 U.S. Department of Education 2016 FSA Training Conference for Financial Aid Professionals

2. OPE Overview Borrower Defense Pell Eligibility Reinstatement
Teacher Preparation
State Authorization
Revised Pay As You Earn (REPAYE)
Strengthening Accreditation
Servicemember Civil Relief Act (SCRA)

3. Borrower Defense

4. Borrower Defense Negotiated Rulemaking: January, February, March 2016
No consensus, but ED took the Committee’s feedback into account when drafting the proposed regulations
NPRM Published, June 16, 2016
45-day comment period – ended August 1, 2016
Received over 10,000 comments representing more than 50,000 parties
Final Regulations Published, November 1, 2016

5. Borrower Defense
Builds on ED’s commitment to protect students’ and taxpayers’ investments
Provides additional protection to borrowers and taxpayers against predatory and other harmful practices

6. Borrower Defense
Clarifies when and how students can obtain loan forgiveness if defrauded or deceived by an institution
Requires institutions to post a Letter of Credit if they engage in misconduct or exhibit signs of financial risk
Requires for-profit schools in which students have poor loan outcomes to provide clear, plain-language warnings to prospective and current students, and to the public

7. Borrower Defense
Makes it simpler for eligible students to receive a closed-school discharge
Prohibits the use of mandatory pre-dispute arbitration clauses and class action waivers that deny students their day in court if they are wronged
Creates a process for group loan discharges when whole groups of students have been subject to misconduct

8. Pell Eligibility Reinstatement

9. Pell Eligibility Reinstatement
Pell Grant Eligibility Reinstatement (Lifetime Eligibility Used)
ED restoring eligibility for students who received Pell Grant funds at schools that closed before the student completed their program
ED exploring the operational changes required to implement this, but will not require an application

10. Teacher Preparation

11. Teacher Preparation Negotiations held in 2012 – No consensus
NPRM published on December 3, 2014
Supplemental NPRM published April 1, 2016
Final regulations published October 31, 2016
Correction to effective dates published Nov. 17, 2016

12. Teacher Preparation Final Regulations:
Establishes new regulations to implement requirements for the teacher preparation accountability system
Amends regulations governing the TEACH Grant Program

13. State Authorization

14. State Authorization Negotiated held in 2014 — No consensus
Notice of Proposed Rulemaking was published in the Federal Register on July 15, 2016
Public comment period closed on August 24, 2016
Received 139 comments
Final Rule submitted for OMB review on November 4, 2016

15. State Authorization The proposed regulation would:
Require an institution offering distance education to be authorized by each State in which the institution enrolls students, if such authorization is required by the State
Define “State authorization reciprocity agreement” and provide that such an agreement could meet State authorization requirements for title IV purposes

16. State Authorization
Require an institution to document the State process for resolving complaints from students enrolled in distance education programs
Require an additional location or branch campus located in a foreign location be authorized by an appropriate government agency of that country
Require disclosures specific to an institution’s distance education programs

17. Revised Pay As Your Earn (REPAYE)

18. Revised Pay As You Earn (REPAYE)
Extends the 10% of monthly discretionary income payment cap to an additional 3 million Direct Loan student borrowers
Forgives remaining debt after 20 years for those who borrowed only for undergraduate study and 25 years for those who borrowed for graduate study

19. REPAYE – Email Campaign
Over 3 million borrowers were ed from March-April, 2016
Cohorts:
Delinquent
In hardship deferment or forbearance
Others

20. Strengthening Accreditation

21. Strengthening Accreditation
In the recent past, some schools went bankrupt while continuing to be accredited by agencies that are supposed to be guarantors of quality and gatekeepers of billions of dollars in federal student aid
This called for additional strengthening of the Department’s oversight of the accreditation system
In November 2015, ED announced a set of actions to strengthen accreditation by increasing transparency and promoting outcomes-driven accountability

22. Strengthening Accreditation
ED has been implementing these executive actions by:
Publishing accreditors’ student achievement standards so the public can make comparison, to identify, for example the accreditors that have a standard for licensure pass rates and the necessary benchmarks
Publishing a customized version of College Scorecard arranged by accreditor to help the public and NACIQI identify differences in institutional outcomes

23. Strengthening Accreditation
Webinars to help accreditors understand what is available at the FSA data center
Increasing the rigor of agency review for recognition
Issuing a draft terminology and reporting guidance to increase the usefulness of information reported to the Department and shared with the public
Establishing an Accreditation Steering Committee to improve coordination across various ED offices and externally with states, accreditors, and others

24. Servicemember Civil Relief Act (SCRA)

25. Servicemember Civil Relief Act
On November 10, 2016 ED issued guidance to retroactively apply the Servicemember Civil Relief Act (SCRA) to FFEL Program loans obtained by servicemembers on or after August 14, 2008

26. Servicemember Civil Relief Act
Guidance builds on previous efforts:
August 2015 guidance authorized FFEL lenders to apply SCRA interest rate limitation to eligible servicemembers using DoD database (DMDC)
May 2016 approval of new SCRA Interest Rate Limitation form for Direct Loan and FFEL programs to fulfill regulatory requirement
April 2016 directive to retroactive apply SCRA

27. Servicemember Civil Relief Act
The November 10 guidance:
Encourages FFEL loan holders and servicers to retroactively adjust the balances of loans belonging to servicemembers who were in active duty status on or after August 14, 2008
Reimburses borrower for overpayment resulting from SCRA interest rate readjustment

28. Servicemember Civil Relief Act
Describes methods used by ED that FFEL Program loan holders and servicers can replicate when making the retroactive adjustments
Provides additional guidance for FFEL Program loan holders and servicers, particularly when servicemembers contest the information in the Defense Manpower Data Center (DMDC)

29. FSA Overview Default Rates Early FAFSA/Prior- Prior
Pell Grant Payment Schedules
Perkins Loan Program
Cash Management
Reporting
Protecting Information
Gainful Employment
Other

30. FFEL/Direct FY ‘13 Cohort Default Rates

32. FY ‘13 Cohort Default Rates
School Type
School Type and Control
FY ‘12 CDR
FY ‘13 CDR
Public – Two Year
19.1%
18.5%
Public – Four Year
7.6%
7.3%
Non-Profit – Two Year
16.1%
16.3%
Non-Profit – Four Year
6.3%
6.5%
For-Profit – Two Year
17.7%
14%
For-Profit – Four Year
14.7%
18.6%
Foreign
3.3%
3.6%
All Schools
11.8%
12.1%

33. Early FAFSA/Prior – Prior

34. Early FAFSA President’s Announcement – FAFSA Start-Up on October 1
Use of Prior-Prior Income Data
Beginning with the FAFSA
October 1, 2016
2015 Tax/Calendar Year for Income

35. Questions?

36. Prior-Prior and Early FAFSA
Verification
Use of DRT Will Reduce Selection for Verification
Documentation of income/taxes from can be used for
Eliminating Tracking Group V6 (Low Income)

37. Prior-Prior and Early FAFSA
Conflicting Information
Occurrences reduced if DRT used for both and
FOTW warnings if reporting income/taxes not equal to reported amounts

38. Prior-Prior and Early FAFSA
Conflicting Information – The CPS Will –
Perform an automatic review to determine if there might be conflicting information between the two FAFSAs
Flag for institutional resolution only those ISIRs where the potential conflict, once resolved, would have a significant impact on the student’s EFC

39. 2017-2018 Pell Grant Payment Schedules

40. 2017-2018 Pell Grant Program Payment Schedules – See DCL GEN-16-19
Maximum Award - $5,920
Increase from $105
Minimum Award - $595
Maximum eligible EFC – 5328
Payment Schedules – See DCL GEN-16-19

41. Perkins Loan Program (DCL GEN-16-05)

42. Perkins Loan Program Federal Perkins Loan Program Extension Act
Extends program through September 30, 2017
Effectively eliminates the eligibility for graduate students to receive Perkins Loans.
Receipt of Direct Loan requirements on the eligibility for undergraduates to receive a loan
Subsequent disbursements can be made if first disbursement made prior to October 1, 2017

43. Perkins Loan Program
Federal Perkins Loan Program Extension Act of 2015
Requires return of federal share of revolving fund once no additional disbursements can be made – June 30, 2017
More information will be provided next year

44. Perkins Loan Program Federal Perkins Loan Excess Liquid Capital (ELC)
Not part of termination of the program
Last year more than $190 million was returned
s to > 600 schools on October 7, with link to “estimated” ELC based on last FISAP
“Appeal” process was provided through October 25
Deadline to return the federal share was November 17
Follow-up letters next week with warning  

45. Cash Management

46. Cash Management Regulations
October 30, 2015: Final regulations published
July 1, 2016: Regulations effective
Ensure that students receiving Title IV, HEA funds:
Have convenient access to their funds
Do not incur unreasonable financial account fees
Are not led to believe they must open a particular financial account to receive their funds 46

47. Public Disclosures – Troubling Practices
Contracts governing these accounts are often private; difficult for Federal agencies and consumer groups to analyze the student card marketplace
Students do not have information about how much the accounts typically cost
Some students receive inferior account terms because of lack of contract transparency; their school fails to negotiate on their behalf

48. Cash Management Regulations
Institutions must by September 1, 2016 –
Post on its public website any contract it has with an outside entity regarding Title IV credit balances
Submit to the Department the URLs for the contracts for publication in an ED central database for public access
Institutions must by September 1, 2017–
Post on its public website data on the number of students and parents with financial accounts under a third-party arrangement and the mean and median annual costs to students and parents
Submit to the Department the URLs for that data 48

49. Correct and Timely Reporting

50. Correct and Timely Reporting
COD –
Student’s academic program information
NSLDS –
Enrollment, including academic program
Revised NSLDS Enrollment Reporting Guide posted on November 22
GE Reporting – October 1 following end of award year

51. Protecting Student Information

52. Protecting Student Information
Under various Federal and state laws and other authorities, including the HEA; FERPA; the Privacy Act of 1974; the Gramm-Leach-Bliley Act; state data breach and privacy laws; institutions may be responsible for losses, fines and penalties - including possible criminal penalties - caused by data breaches.

53. Protecting Student Information
DCLs GEN and GEN-16-12
Reminds institutions (and their third-party servicers) of their continuing obligations to protect data used in all aspects of the administration of the Title IV Federal student financial aid programs.

54. Protecting Student Information
The SAIG Enrollment Agreement includes a provision that the institution –
Must ensure that all Federal Student Aid applicant information is protected from access by or disclosure to unauthorized personnel.

55. Gainful Employment See DCL GEN-15-12

56. Gainful Employment
The HEA provides that to be Title IV eligible an educational program must:
Be offered by a public or non-profit institution and leads to a degree; or
Prepare students for gainful employment in a recognized occupation.

57. Gainful Employment Final rules published on October 31, 2014
Rules became effective July 1, 2015
Published Dear Colleague Letter GEN summarizing the rules

58. Gainful Employment Debt-to-earnings (D/E) rates
Annual Earnings D/E rate = annual debt burden divided by median annual earnings
Discretionary Income D/E rate = annual debt burden divided by discretionary median annual income
Discretionary annual income = median annual income less 150% of poverty line income

59. Gainful Employment Pass: Annual D/E < = 8%, or
Discretionary D/E < = 20%
Fail: Annual D/E > 12%, and
Discretionary > 30%
Zone: Annual D/E > 8% and < = 12% or Discretionary D/E > 20% and <= 30%

60. GE Results Program’s loses Title IV eligibility if:
Fails in two out of three years; OR
Fails or in the zone for four consecutive years

61. GE Reporting Report all Title IV Students by July 31, 2015
Report 2008–2009 through 2013–2014 award years
Report following award years by October 1
Still time to report or correct for
Still time to correct earlier (or missing) reported data

62. GE Corrections and Challenges
Draft GE Program Completer List Corrections
Files sent to institutions on June 1
Corrections due by July 28
Draft GE Program D/E Rates Data Challenges
Files sent to institutions on October 19
Challenges due by December 7

63. GE Disclosures
Must disclose certain information on each GE program’s web page using ED provided disclosure template
Updated each January, except
Delay for upcoming disclosure while new template developed

64. Experimental Sites

65. Experimental Sites Pell for short-term career programs
Pell for students with a bachelors degree
Reduced Unsubsidized Loans
FWS for High School Tutors
Prior Learning Assessments
Limited Direct Assessment

66. Experimental Sites Competency Based Education
“Second Chance Pell” for incarcerated students
Dual Enrollment – High school and postsecondary
Additional Loan Counseling

67. Other Things

68. Other Things Direct Loan Servicer Phone Number
Old Direct Loan Servicer (ACS) toll-free number now belongs to a private “debt-relief” company
Public Service Loan Forgiveness (PSLF)
Information on Audit Submission Timelines
Upcoming Change to G-845 Process
Confirm TG Numbers by December 9
FSA Feedback System

69. Sequestration – Iraq-Afghanistan Service Grant
Other Things
Sequestration – Iraq-Afghanistan Service Grant
First disbursed on or after July 1, and before October 1, 2017
$5,920
6.90%
$408.48
$5,511.52
First disbursed on or after October 1, 2017 and before July 1, 2018
FY 2018 (on or after October 1, 2017) sequester- related reduction percentages not yet determined

70. Thank You