1. NASFAA Conference Application Processing System Update Seattle, Washington July 2006

2. 2 Today’s Presenters Marilyn LeBlanc Director of Application Processing Michele Brown Director of Applicant Products and Customer Service

3. 3 Today’s Topics Higher Education Reconciliation Act (HERA) of 2005  Background  HERA Implementation Plan for 2006-07 and 2007-08 Other 2007-08 (non-HERA) Application Processing System Changes  Paper FAFSA  Paper SAR, eSAR, and ISIR  FAFSA on the Web, FAFSA on the Web Worksheet, PIN Site  New Application Edits

4. The Higher Education Reconciliation Act (HERA) of 2005 Background and Implementation Plan for 2006-07 and 2007-08

5. 5 Conference Report passed the House on December 19, 2005 Conference Report passed the Senate on December 22, 2005 House passed Senate version on February 1, 2006 President signed into law February 8, 2006 Higher Education Reconciliation Act of 2005 7

6. 6 HERA changes include –  PLUS for graduate and professional students  Increased annual loan limits  Return of Title IV funds changes  New grant programs  Need analysis and cost of attendance changes  Student eligibility changes Today’s focus will be on changes affecting –  The FAFSA  The Application Processing System Higher Education Reconciliation Act of 2005 7

7. 7  Other ED interest sessions that include HERA information –Academic Competitiveness Grant and National SMART Grant Programs Update –Return of Title IV Funds –FFEL and Direct Loan Programs Update –Loan Forgiveness, Cancellation, and Discharge  General session on Saturday, July 8 –Department of Education Update

8. 8 HERA Dear Colleague Letters GEN-06-02 (3/10/2006) – Enactment of HERA of 2005 GEN-06-03 (3/14/2006) – Correction to GEN-06-02 GEN-06-04 (4/5/2006) – ACG and National SMART Grant GEN-06-05 (4/27/2006) – Changes to student and institutional eligibility GEN-06-06 (5/2/2006) – National SMART Grant – eligible majors GEN-06-08 (5/3/2006) – Implementation guidance for the ACG and National SMART Grant ANN-06-05 (5/30/06) – HERA Training Opportunities ANN-06-06 (6/14/06) – HERA Webinar DCL-06-10 (6/20/06) – Implementing HERA provisions Interim Final Regulations (7/3/06) – ACG and SMART Grant

9. 9 HERA Electronic Announcements Operational Guidance 5/5/2006 – High-Level Overview of Operational Implementation 5/11/2006 – Upcoming CPS Reprocessing 5/17/2006 – CPS Reprocessing Reminder 5/19/2006 – Updates to R2T4 on the Web and Archival of PC Product 5/23/2006 – Notice of Reprocessing Issue and Resolution 6/7/2006 – First draft of 2007-2008 FAFSA Available for Comment 6/14/06 – Student Eligibility Requirement for Drug-Related Offenses 6/21/06 – Notice of Issue with May 24, 2006 Reprocessing 6/23/06 – Additional Reprocessing Scheduled for June 23, 2006 6/26/2006 – Reminder: R2T4 PC Product Archival 6/26/06 – 2006-07 Updated SAR Comment Codes and Text 6/27/2006 – 2006-07 Revised EDE Technical Reference 6/2006 – ACG/SMART Operational Guidance

10. 10 Implementation Approach and Considerations Many provisions effective beginning in 2006-07 Implementation approach and considerations – Limit amount of change to 2006-07 Central Processing System (CPS), the FAFSA, and SAR and ISIR Implement processes for new grant programs as quickly as possible Provide customer software providers enough time for development Leverage existing functionality wherever possible

11. New Grant Programs Implementation for 2006-07 and 2007-08

12. 12 Higher Education Reconciliation Act HERA Creates Two New Grant Programs –Academic Competitiveness Grant (ACG) –National Science and Mathematics Access to Retain Talent (SMART) Grant

13. 13 Academic Competitiveness Grant ACG Grants require students to be --  Pell Grant recipients  U.S. Citizens  Enrolled at 2- or 4- year institutions  Enrolled full-time Must be a first or second year undergraduate student Must have completed a rigorous secondary school program of study 1 st Academic Year –  Must have completed secondary school program after 1/1/06  $750 award amount 2 nd Academic Year –  Must have completed secondary school program after 1/1/05  $1,300 award amount

14. 14 Academic Competitiveness Grant ED’s implementation goal -- to design a process to help schools identify students who are potentially eligible for ACG Schools can also identify eligible applicants Schools are responsible for verifying ACG eligibility before disbursing funds

15. 15 Academic Competitiveness Grant 2006-07 Implementation On 6/30/06, began sending letters and e-mails to all 2006-07 applicants (Web and paper filers) who applied prior to 7/1/06 and appeared to meet minimum ACG requirements –  U.S. Citizen  Pell eligible  Graduated from high school after 1/1/2005 (age used as proxy)  1 st or 2 nd year in school E-mails and letters inform applicants how to provide ACG information –  Web site  Federal Student Aid Information Center (FSAIC)

16. 16 Academic Competitiveness Grant 2006-07 Implementation Web site will “screen” applicants (U.S. citizen, Pell eligible) and ask students –  Did they or will they complete high school program of study after 1/1/05?  In what State did they complete high school program of study? If that State has approved Advanced or Honors Programs or State Scholars Initiative requirements  State programs presented to the applicant in a dropdown box  Applicant selects rigorous program (if any) from dropdown box pick list

17. 17 Academic Competitiveness Grant 2006-07 Implementation If applicant’s State does not have a rigorous program listed (or student did not complete rigorous program of study), applicants can tell us if they –  Took courses similar to State Scholars Initiative, and/or  Took at least two AP or IB courses in high school with a minimum passing score of 3 or 4 respectively FSAIC Customer Service Reps will follow similar process on the phone to collect ACG data

18. 18 Academic Competitiveness Grant 2006-07 Implementation For students who provide ACG information and appear to be eligible --  Student Aid Report (SAR), with comments, sent to students  Central Processing System (CPS) notifies all institutions of student’s potential ACG eligibility via – »Comment codes on ISIR, and »Flat file

19. 19 Academic Competitiveness Grant 2006-07 Implementation 2006-07 Implementation ISIRs sent in new “pushed” message class IGAA07OP to all institutions listed on transaction Flat file sent in new message class ED2007OP –Includes: SSN, Name ID, Name (last, first, MI), Transaction Number, DOB, answers to ACG questions, and rigorous program code If school code added later to transaction, ACG data sent to new school on ISIR and in flat file

20. 20 Academic Competitiveness Grant 2006-07 Implementation Students who apply for aid on or after 7/1/06 – –Online Applicants -- FAFSA on the Web will “screen” applicants for potential eligibility and give applicants option to provide ACG information –Paper Applicants -- No change to paper 06-07 FAFSA -- filers will be sent comment on SAR directing them to Web site or FSAIC SAR sent to students Central Processing System (CPS) notifies institutions of potential ACG eligibility on ISIR and in flat file

21. 21 Academic Competitiveness Grant 2006-07 Implementation Corrections on the Web – –If student “corrects” transaction by adding ACG data only, resulting ISIR sent in new “pushed” ISIR message class IGAA07OP –If student makes corrections in addition to adding ACG data, new ISIR will be sent in existing IGSA07OP or IGSG07OP message class

22. 22 Academic Competitiveness Grant 2006-07 Implementation FAAs may also enter ACG information in FAA Access to CPS Online if student is potentially eligible – Only on initial and renewal applications – Data cannot be corrected Student ACG data may be viewed on FAFSA on the Web FAA Access to CPS Online

23. 23 Academic Competitiveness Grant 2007-08 Implementation FAFSA on the Web and FAA Access to CPS Online “screens” applicants for potential eligibility and gives option to provide ACG information Paper filers sent comment on SAR directing them to Web site or FSAIC

24. 24 Need Analysis Changes Implementation for 2006-07 and 2007-08

25. 25 Need Analysis Changes Simplified Needs Test (SNT) and Automatic Zero EFC Criteria Treatment of Qualified Education Benefits Treatment of Small Business Assets

26. 26 SNT and Auto Zero EFC Criteria SNT and Automatic Zero EFC – Only parent’s type of tax return filed will be considered for dependent students – Means-tested federal benefit program an alternative to tax return requirement Automatic Zero EFC Only – Income threshold increased from $16,000 to $20,000

27. 27 SNT and Auto Zero EFC Criteria 2006-07 Implementation On May 19, 2006, two changes made to CPS -- –1 - For dependent students, updated system to look only at parent’s type of tax return filed to qualify for SNT or Auto Zero EFC –2 - Increased Auto Zero EFC income parameter in system from $16,000 to $20,000 for – Parents of dependent students, and Independent students with dependents other than a spouse

28. 28 SNT and Auto Zero EFC Criteria 2006-07 Implementation CPS reprocessed students who applied for aid prior to May 19 and –  Met new HERA criteria for SNT or automatic zero EFC  Did not already have an EFC = 0 on highest transaction Applicants who apply on or after May 19 will have new criteria applied

29. 29 SNT and Auto Zero EFC Criteria New Means-Tested Federal Benefit Program criteria Students may now qualify for SNT or Auto Zero EFC if they or their parents – Received benefits from a means-tested federal program Meet relevant income thresholds

30. 30 SNT and Auto Zero EFC Criteria 2006-07 Implementation Will not revise 2006-07 Web or paper FAFSA to collect this information If institution learns that parent/student received means-tested federal benefit, but did not meet SNT or Auto Zero EFC criteria because they were required to file an IRS 1040 form, institution should correct to ‘Yes’ FAFSA question 34 or 72 (was student or parent eligible to file a 1040 A or 1040 EZ?)

31. 31 SNT and Auto Zero EFC Criteria 2007-08 Implementation New SNT/Auto Zero EFC criteria (tax return and Auto Zero income parameter) rolled forward into 2007-08 CPS Means-tested benefits questions will be asked about base year 2006 on both 2007-08 paper and online FAFSAs

32. 32 Treatment of Qualified Education Benefits Qualified Education Benefits -- –Consistent treatment, and –Now treated as an asset 2006-07 Implementation – No change to instructions for investment net worth on 2006-07 paper or online FAFSA – If institution becomes aware that parents of a dependent student or an independent student (or spouse) owns a qualified education benefit, institution must assist student in correcting asset net worth question on the FAFSA 2007-08 Implementation – 2007-08 paper and online FAFSA instructions for investment questions will describe how to report qualified education benefits

33. 33 Treatment of Small Business Assets Exclude family-owned and controlled small businesses from asset net worth 2006-07 Implementation – No change to the instructions for business asset net worth questions on the 2006-07 paper or online FAFSA – If an institution becomes aware that a parent or student reported the asset net worth of a family-owned and controlled small business on the FAFSA, institution must assist student in correcting the question on the FAFSA 2007-08 Implementation – 2007-08 paper and online FAFSA instructions for investment questions will describe how to report family-owned and controlled small businesses

34. 34 Student Eligibility Implementation for 2006-07 and 2007-08

35. 35 Definition of Independent Student Students serving on active duty in the U.S. Armed Forces for other than training purposes are now considered independent

36. 36 Definition of Independent Student 2006-07 Implementation No change to 2006-07 paper or online FAFSA If institution becomes aware that an otherwise dependent student is serving on active duty it must submit a “dependency override” to CPS CPS will recalculate EFC using independent student formula New SAR comment informing students of new active duty military independence criterion -- –Comment on SARs sent to students as part of May 19th reprocessing –Comment appears on SARs for all dependent student applications and corrections submitted after May 19, 2006

37. 37 Definition of Independent Student 2007-08 Implementation 2007-08 paper and online FAFSAs will include new dependency status question in Step 3

38. 38 Drug Offenses Student eligibility provision modified - students lose eligibility for Title IV aid only if the drug related offense for which they were convicted occurred during a period of enrollment for which the student was receiving Title IV aid

39. 39 Drug Offenses 2006-07 Implementation All students who applied on or before June 30, 2006 (paper or Web) and answered "Yes" (either 2-partial ineligibility or 3-full ineligibility) to drug question, or left question blank, will – –Receive e-mail or letter with revised Drug Conviction Worksheet –Be instructed to correct response to drug question, if necessary On July 1, 2006 – Drug question wording, instructions, and drug worksheet revised on FAFSA on the Web Drug Conviction Worksheet on the Web and FSAIC automated response system revised Question on paper FAFSA will not be reworded, but paper filers will continue to receive SAR with revised Drug Conviction Worksheet

40. 40 Drug Offenses 2007-08 Implementation Both paper and online FAFSA drug offense wording updated Help text on FAFSA on the Web updated

41. 41 2007-08 Application and Application Processing System Changes

42. 42 2007-08 Application Processing System Changes  Statistics  Paper FAFSA  Paper SAR, eSAR, and ISIR  FAFSA on the Web  FAFSA on the Web Worksheet  PIN Web Site  Renewal Application Process  FAA Access to CPS Online  New Application Edits  NSLDS Aid History Information

43. 43 Application Processing Statistics For 2006-07 –  94% of applications filed electronically  6% of applications filed on paper FAFSA Paper vs. Electronic Filers through Week 25

44. 44 The 2007-08 Paper FAFSA 60-day public comment period began on 6/6/06 E-mail comments to FAFSAComments@ed.govFAFSAComments@ed.gov To view draft FAFSA: –Go to IFAP at http://ifap.ed.govhttp://ifap.ed.gov –Scroll down to “Publications” –Click on “FAFSAs and Renewal FAFSAs” –Click on “By 2007-2008 Award Year” –Click on “Draft FAFSA Form/Instructions”

45. 45 The 2007-08 Paper FAFSA 2007-08 FAFSA is yellow and purple New packaging: –Form pages numbered 1 through 4 –Notes pages 5 through 10 –Expanded instructions; one page of “Tips”

46. 46 The 2007-08 Paper FAFSA States that do not specify priority deadline dates have been moved to the top of the list on front page Question numbers 27 & 28 may be eliminated to create space for new questions required by HERA –#27 – “Interested in student loans?” –#28 - “Interested in work-study?” Enrollment status question moved to first page of application to follow “grade level in college?”

47. 47 The 2007-08 Paper FAFSA Four college and housing code choices Colleges re-numbered on paper FAFSA to 96a – 96h Web continues to include six college and housing code choices

48. 48 2007-08 Paper SAR –Paper SAR will be yellow in color –DRN will be in the top right hand corner of the SAR; same position as on eSAR

49. 49 2007-08 eSAR and ISIR eSAR -Changing return address to -- “FederalStudentAid” -Changing e-mail subject line to “FAFSA Results – 2007-2008 SAR” ISIR -Will include up to six school and housing codes -2007-08 ISIR record layout posted in late July -2007-08 ISIR in flat file format only (no XML ISIR)

50. 50 2007-08 FAFSA on the Web Year of minimal change Applicants must enter SSN number twice in order to verify accuracy Implement Automatic Zero EFC and SNT skip logic enhancements for new means- tested federal benefits program questions Will partially mask preparer’s SSN

51. 51 2007-08 FAFSA on the Web Site Common look and feel for FAFSA on the Web

52. 52 2007-08 FAFSA on the Web Worksheet Changes correspond to changes made on FAFSA on the Web For 2006-07, IRS tax information line items were received late – which do users prefer?  Issue the Worksheet early/on time and incomplete?  Issue the Worksheet late and complete? Other comments on the Worksheet?

53. 53 2007-08 PIN and PIN Web site PIN Web site updated to match look and feel of FAFSA on the Web No other changes to PIN process or Web site

54. 54 2007-08 Renewal Application Process Renewal Reminders sent in early January 2007 (instead of once in November and again in February) –Students with a valid e-mail address will receive e-mail reminders –If no e-mail address or e-mail is undeliverable, paper reminder letter will be sent to applicant

55. 55 2007-08 FAA Access to CPS Online Same look and feel as FAFSA on the Web Will partially mask preparer’s SSN

56. 56 2007-08 Edit Changes To prevent schools from viewing/receiving transactions that contain a PJ by another school, a new school code cannot be added to transaction that contains an FAA Adjustment flag

57. 57 2007-08 Edit Changes New warning edits if --  Parent’s or independent student’s tax return status is “Will not file” and sum of earned income is within required range to file a return  Parent’s AGI equal to student’s AGI  Dependent student’s AGI equal to Worksheet A  Parent or student reports receiving TANF or SSI but does not report an amount on Worksheet A

58. 58 IPA and Asset Assessment Rates Increase in Income Protection Allowances –To $3000 from $2200 for dependent students –To $6050 from $5000 for independent students (single) without dependents and married students (without dependents) with a spouse enrolled at least ½ time –To $9700 from $8000 for independent (married) students without a dependent whose spouse is not enrolled Decrease in Asset Assessment Rates –35% to 20% for dependent students and independent students without dependents –12% to 7% for independent students with dependents other than a spouse

59. 59 NSLDS Changes NSLDS will send ACG and SMART data to CPS Up to 3 ACG and 3 SMART records will be included on pre- screening record New ACG and SMART Overpayment Contact Information will be added Grad PLUS MPN flag added to the pre-screening process  New Grad PLUS loan status codes of D3 and GB added  A change in loan status will generate a post-screening record to CPS; any change will generate a post-screening reason code of “16” Value of “F” (Fraud Convictions) added as a valid value for Pell, FSEOG, ACG, SMART and Perkins Overpayment flags Post-screening codes 17 and 18

60. 60 2006 Fall Conferences (formerly Electronic Access Conferences) Arlington, VA Arlington, VA (Aug 14 - 15) October 30 - November 2 Royal Pacific Resort Orlando, Florida November 28 - December 1 Paris Las Vegas Las Vegas, Nevada

61. 61

62. 62 OtherNoteworthyNews

63. 63 Key 2006-07 Application and Application Processing Dates May 19: Reprocessing done for limited number of need analysis changes July 1:  Sent notifications about change to student eligibility for drug-related offenses; reworded drug conviction worksheet and drug question on Web  Implemented new ACG Web screens and student and school notification processes

64. 64 Other Important Dates Beginning the week of August 1: FSA will begin processing ACG/SMART Grant initial authorizations for GAPS Beginning the week of August 6: Schools can draw down funds for ACG/SMART via GAPS August 8: Updated R2T4 on the Web available August 11: Schools can download an EDExpress service release that will enable them to create and submit GPLUS origination and disbursement information to COD August 12: Schools can submit GPLUS originations and disbursements to COD

65. 65 Other Important Dates September 1: – Schools can download full release of EDExpress with enhancements for tracking GPLUS and PLUS origination and disbursement information – Schools can enter and store ACG/SMART in EDExpress – Schools can use EDExpress to print ACG/ SMART Grant ESOA’s containing initial funding authorization amounts

66. 66 Other Important Dates December 16: COD and EDExpress (full release) available for schools to submit ACG and SMART Grant award and disbursement information April 2007: Reporting for ACG, SMART Grant, and loans available

67. 67 Important 2007-08 Dates July 2006 Federal School Code file updates due Draft ISIR Layout available on IFAP September 2006 Renewal FAFSA Process Guide October 2006 ISIR Guide Summary of Changes to the Application Processing System Process Guide Updated EDE Technical Reference EFC Formula Guide Federal School Code Books mailed

68. 68 Important 2007-08 Dates November 2006 School Electronic Processing Guide Revised ISIR Layout in EDE Technical Reference January 2007 January 1 FAFSA on the Web, Renewal FAFSA on the Web, Corrections on the Web available January 1 FAA Access to CPS Online available January 2 Application processing system starts up

69. 69 2007-08 Web Demonstration Sites FAFSA on the Web and FAA Access demonstration sites will be available later this year http://fafsademo.test.ed.gov –To access sites, go to http://fafsademo.test.ed.gov –Enter:  User Name: eddemo  Password: fafsatest Click on FOTW or FAA Access buttons at bottom of screen to access demo site Available until December 2007