1. MASFAA Spring Conference Bay St. Louis, MS June 17, 2010 Federal Update

2. Agenda Title IV Program Budget Student Aid Reform Bill FSA Programs Update Two Pells in an Award Year Operational Considerations Recent Regulatory and Guidance Changes

3. Title IV Program Budget Aid Available (in thousands)

4. Student Aid Reform Bill (HR4872) Signed on March 30, 2010 Pell Grant –$ 61 billion increase (includes $36 billion for yearly increases) –$5,550 maximum award for 2010-11 –Indexed to CPI starting 2014 –Pell shortfall paid down except for $5.5 billion 4

5. Student Aid Reform Bill (HR4872) Signed on March 30, 2010 100% Direct Lending as of July 1, 2010 ‒ Sub, Unsub, PLUS, Consolidation ‒ No more FFEL first disbursements ‒ Subsequent FFEL disbursements can be made ‒ In-school consolidation – One year

6. 6  What’s Not In the Bill ‒No EFC Calculation Simplification o Elimination of Assets o All financial data from tax return ‒No new Perkins Program o Expansion of Program to more schools and more students o Recall of existing loans to FSA ‒Relaxation of Drug Conviction Provision Student Aid Reform Bill (HR4872) Signed on March 30, 2010

7. Additional Funding for HBCU, Hispanic Serving Institutions, Tribal Colleges and Universities, and other MSIs receive additional funding American Graduation Initiative not included Additional Funding for community colleges (College Access College Grant) – Deadline for states to submit application is July 2, 2010 $10 billion in deficit reduction 7

8. FSA Programs Update

9. American Opportunity Tax Credit Excludable (non EFA) income in needs analysis (line 49 on 1040 and line 31 on 1040A) Also refundable portion on line 66 on 1040 is excludable –Same as Hope and Lifetime Learning Tax Credits 9

10. NPRM To Be Released June 18, 2010 (45 Day Comment Period) Foreign Schools Program Integrity 10 Effective 7/1/2011

11. Program Integrity NegReg Agenda  Definition of a high school diploma  Ability to Benefit  Misrepresentation by institutions  Incentive compensation  State authorization and institutional eligibility  Gainful employment in a recognized occupation  Definition of credit hour 11

12. Program Integrity NegReg Agenda  Agreements between institutions of higher education  Verification of information on FAFSA  Satisfactory academic progress  Retaking coursework  Return of Title IV aid: Term-based module programs  Return of Title IV aid: Taking attendance  Disbursements of Title IV funds 12

13. Direct Loan Transition Status as of April 29

14. Split Servicing ED realizes concern with students with split servicing Currently approximately 18% of FFEL loans are held by lenders. Process in place to review and address FFEL/DL portfolio 14

15. New Exit Counseling www.nslds.ed.gov/nslds_FAP/secure/logon.jsp 15 Students; www.nslds.ed.gov EA March 29, 2010

16. Cohort Default Rates

17. Public Service Employees Loan Forgiveness Eligible borrower with DL (including PLUS and Grad PLUS) FFEL borrowers gain eligibility with DL consolidation –no reconsolidation of existing joint reconsolidated FFEL Requires 120 monthly payments beginning October 1, 2007 (within 15 days of due date) –Does not have to be consecutive payments Full-time public service employees 34 CFR 685.219 17

18. Federal Perkins “Red Flag Rule” Electronic Announcement May 6, 2010 FTC delays Identify Theft Red Flag Rule until June 1, 2010* www.ftc.gov/redflagsrule * EA June 14, 2010 – Another Red Flag enforcement delay until 12-31-10

19. Federal Perkins Cohort Default Rate June 30, 2009 rate posted eCampus- Based Report in April 2010 National rate = 10.04% with $894 million in default Mississippi rate = 13.46% with 12.4 million in default

20. New Non-EFA Veterans Benefit Marine Gunnery Sergeant John D. Fry Scholarship for children of service members who die in line of duty after September 10, 2001 EA August 13, 2009

21. Pell Reporting Changes Effective 2010-11 award year Maximum number of days for Pell Advanced Funded schools to submit actual disbursements of “true” has been reduced from 30 days to 7 days. Same as currently required for other FSA programs 21 7

22. Reprocessed 2010-11 ISIRs Electronic Announcement May 14, 2010 (and EA May 5, 2010) Based on Revised Pell Payment Scheduled (DCL P-10-03), new maximum EFC is 5273 CPS reprocessing began May 18, 2010

23. Iraq/Afghanistan Dependent Update Electronic Announcement May 13, 2010 DoD/ED match commenced late April 2010 2009-10 eligibility for zero EFC – 30 students (25 schools to receive pass word protected file) DoD match flag is 298 and COD “Post 9/11 Deceased Veteran Indicator” set to true 2010-11 Iraq and Afghanistan Service Grant - COD will implement later this year

24. Two Pells in One Award Year Funding Availability Schools will be able to view and draw down 2010-2011 Pell Grant Initial funds in G5 on Tuesday, May 25, 2010. COD will accommodate by May 26, 2010

25. Receiving up to Two Pell Grants During a Single Award Year CFR: 690.67

26. Two Pells In An Award Year Authorized by the Higher Education Opportunity Act (HEOA). If eligible, student able to receive all or a portion of a second Scheduled Award within an Award Year. Objective is to help needy students accelerate their academic progress. Effective for the 2009-2010 Award Year. –Implementation by schools is not optional. –Students eligible for second Scheduled Award in 2009-2010 must be paid. Final Regulations Published October 29, 2009. 4

27. Two Pells: Student Eligibility First Scheduled Award –Student otherwise Pell Grant eligible. –Enrolled at any enrollment status. –Amounts received will count toward life-time aggregate limit, if applicable. Second Scheduled Award –Student otherwise Pell Grant eligible. –Enrolled at least half-time. –Received 100% of first Scheduled Award. –Beginning with 2010-2011 Award Year, student must demonstrate academic year acceleration. 5

28. Acceleration At least one credit or clock hour (or partial hour if school uses partial hours) in the payment period must be attributable to the student’s next academic year. Not “grade progression” Must be applied for any required recalculation. Gives meaning to statutory use of term “accelerate” 28

29. Acceleration  Applies beginning with the 2010-2011 Award Year ‒Cross-over period payment awarded from upcoming year does not require counting hours because payment will be from first Scheduled Award. ‒Hours earned in summer 2010 count toward acceleration later in 2010-11 Award Year 50

30. Transfer Students Options Assumption Method Hour-earned Method Receipt of Additional Information School’s policy options: –Student by student –Single method to all students in a program –Program by program 34 CFR 690.67(b)

31. Transfer Example – Assumption Method Receives 100% of 1 st Schedule Award at School A then transfers to School B What should School B do under the Assumption Method? –Assume completed the credit or clock hours in the 1 st Academic Year

32. Transfer – Assumption Method Receives < 100% 1 st Scheduled Award at School A, then transfers to School B How does School B determine eligibility? –Use Formula for credit/clock hours Pell disbursed – School A * Credit/clock hours in AY – School B Amount of Scheduled Award at prior school

33. Transfer – Assumption Method Sample Formula for < 100 % received: $4,900 disbursed at Prior * 24 in your AY $5,350 scheduled at prior school = 21.9 hours Round down to 21 hours

34. Transfer – Hours Earned Method Hours Earned Method optional Must have time period when hours earned Exclude AP, IB, testing out, life experiences Must attribute to the current award year any credits/clock hours earned at other schools.

35. Transfer Students Options Receipt of additional information –During the payment period Adjust if necessary –After payment period ends No adjustment required XYZ University Academic Transcripts XYZ University Academic Transcripts 34 CFR 690.67(b) 4

36. Special Circumstances Financial Aid Director may –Waive hours attributable to 2 nd AY if Circumstances beyond student’s control Individual basis determination Documentation always required 34 CFR 690.67(c)

37. Special Circumstances Waiver includes, but not limited to –Withdrawals – due to illness –Inability to register – classes not offered Waiver does not include –Withdrawals to avoid a bad grade –Not registering due to a particular instructor 34 CFR 690.67(c)

38. Non-applicable credit or clock hours Eligibility for the 2 nd Scheduled Award may not use –Advance Placement (AP) programs –International Baccalaureate (IB), –Testing out, –Life experiences or –Similar competency measures 34 CFR 690.67(c)

39. Crossover Payment Periods - payment period that contains 6/30 and 7/1 ( CFR 690.64) JUNE JULY 2009-10 2010-11

40. 2009-10 Crossover Transition If considered part of 09/10 award year –New regulations do NOT apply –Do not have to pay out of the award year that produces the highest payment –Do not have to ensure hours attributable to 2 nd academic year –Must be at least half-time If considered part of 10/11 –New Regulations apply

41. 2009-10 Crossover Transition  2009-2010 Award Year –If awarding second Scheduled Award from 2009- 2010 (including summer 2010 cross-over) new regulations do not apply. –Must develop 2010 cross-over written policy prior to July 1, 2010 based on HEOA, DCL GEN-08-12, and good faith.  2010-2011 Award Year –If awarding from 2010-2011 and beyond (including summer 2010 cross-over) new regulations do apply.

42. 2009-10 Crossover Transition  Policy established on or after July 1, 2010 ‒Rules apply for both years– o Must pay higher of student’s 2009-2010 or 2010-2011 award. o If 2009-2010 higher, acceleration rule applies, regardless of school’s policy.  If student has not progressed to next academic year, student not eligible for 2009-2010 award, therefore pay Pell from 2010-2011, if eligible.

43. Crossover Periods When October 29, 2009 regulation becomes effective: –MUST assign a crossover payment period to award year in which student receives greater payment at time payment is initially calculated * –MUST reassign if subsequent information to initial calculation shows greater payment would result But not later than ED Pell processing deadline – 9-28-10 –MAY reassign if information received AFTER ED Pell processing deadline but BEFORE Pell Admin Relief deadline * 2009/10 crossover exempt if school treats as part of 2009/10 award year

44. Two Pells: Crossover Payment Period May be different award year for Pell than for other Title IV aid. Packaging issues –For Pell, use EFC for the award year from which the student will be paid. –For other aid, EFC and COA can be from the other year, but must be the same for those programs. –Amount of Pell is EFA for other aid. –If loan in package, school may chose EFC and COA from other year but, if campus-based also, EFC and COA must be same as loan.

45. Examples of Payment from Two Scheduled Awards CFR: 690.63(h)

46. 2009-10 Two Scheduled Pell Awards ( Summer as Header and Trailer) New Rule: Up to Two Scheduled Awards per Award Year Student’s Scheduled Award is $5,350 for the award year (Summer 2009 and 2010 are part of the 2009-10 award year)* Fall 2009 $2,675 Summer 2010 $2,675 Summer 2009 $2,675 2009-10 Award Year Spring 2010 $2,675 200% 2009-10 AY * Policy written before July 1, 2010

47. Term Based Example Spring 2010 $2,675 Fall 2010 $2,775 Fall 2009 $2,675 Spring 2011 $2,775 2009-10 Award Year 2010-11 Award Year Summer 2011 $2,775 Summer 2010 $2,675 150% 2009-10 AY 150% 2010-11 AY New Law: Up to 2 Scheduled Awards per Award Year Assume student’s 2009-10 Scheduled Award is $5,350 and $5,550 for 2010-11

48. New Law: Up to Two Scheduled Awards per Award Year 1500 clock hour program; AY = 900 hours/26 weeks Student’s Scheduled Award is $5,350 for the award year 450 hours/13 weeks $2,675 300 hours/8 weeks $1,645 450 hours/13 weeks $2,675 300 hours/8 weeks $1,645 2009-10 Award Year 160% 2009-10 AY Clock Hour Example

49. Spring 2010 50% Paid 9 Hours Earned Fall 2009 50% Paid 9 Hours Earned First Scheduled Award Summer 2010 Enrolled in 6 Hours NOT ELIGIBLE Second Scheduled Award Six Hours to Prior Academic Year No Hours for New Academic Year Cannot pay second Scheduled Award May pay from 2010-11 Award Year Assumes Academic Year defined as 24 hours Semester Academic Year Progression 54

50. Spring 2010 50% Paid 6 Hours Earned Fall 2009 50% Paid 7 Hours Earned First Scheduled Award Summer 2010 Enrolled in 12 Hours ELIGIBLE Second Scheduled Award Eleven Hours to Prior Academic Year One Hour for New Academic Year Pay 50% of Second Scheduled Award Assumes Academic Year defined as 24 hours Semester Academic Year Progression 55

51. Winter 2011 25% Paid 9 Hours Earned Fall 2010 25% Paid 10 Hours Earned First Scheduled Award Spring 2011 34% Paid 12 Hours Earned Assumes Academic Year Defined as 36 Hours Quarter Academic Year Progression Summer 2011 Enrolled in 6 Hours ELIGIBLE Five Hours to Prior Academic Year One Hour for New Academic Year Pay 16% remaining of First Scheduled Award and 1% of Second Scheduled Award 59

52. Spring 2011 50% Paid 12 Hours Completed Fall 2010 50% Paid 12 Hours Completed First Scheduled Award Full-Time Summer 2011 Enrolled in 6 Hours ELIGIBLE Second Scheduled Award Assumes Academic Year Defined as 24 hours No Hours to Prior Academic Year Six Hours for New Academic Year Semester Hours Completed

53. Spring 2011 50% Paid 9 Hours Completed Fall 2010 50% Paid 12 Hours Completed Summer 2011 Enrolled in 6 Hours ELIGIBLE Second Scheduled Award Assumes Academic Year Defined as 24 hours Three Hours to Prior Academic Year Three Hours for New Academic Year Semester Hours Completed First Scheduled Award Full-Time

54. Spring 2011 50% Paid 6 Hours Completed Fall 2010 50% Paid 7 Hours Completed Summer 2011 Enrolled in 12 Hours ELIGIBLE Second Scheduled Award Assumes Academic Year Defined as 24 hours Eleven Hours to Prior Academic Year One Hour for New Academic Year Semester Hours Completed First Scheduled Award Full-Time

55. Spring 2011 50% Paid 9 Hours Completed Fall 2010 50% Paid 9 Hours Completed Summer 2011 Enrolled in 6 Hours NOT ELIGIBLE Second Scheduled Award Assumes Academic Year Defined as 24 hours Six Hours to Prior Academic Year No Hours for New Academic Year Semester Hours Completed First Scheduled Award Full-Time

56. Summer 2010 50% Paid 9 Hours Completed Fall 2010 50% Paid 9 Hours Completed First Scheduled Award Summer 2011 Enrolled in 6 Hours ELIGIBLE Paid ½ time 2nd Scheduled Award Assumes Academic Year Defined as 24 hours Semester Hours Completed Spring 2011 Enrolled in 9 hours ELIGIBLE Paid ¾ time 6 hours prior AY 3 hours 2 nd AY 0 hours prior AY 6 hours 2 nd AY Assumes completed at least 6 spring hrs Assume Summers part of 10/11 award year First Scheduled Award Full-Time

57. Summer 2010 50% Paid 9 Hours Completed Fall 2010 50% Paid 6 Hours Completed First Scheduled Award Summer 2011 Enrolled in 6 Hours ELIGIBLE Paid ½ time 2nd Scheduled Award Assumes Academic Year Defined as 24 hours Semester Hours Completed Spring 2011 Enrolled in 9 hours NOT ELIGIBLE 0% paid 9 hours prior AY 0 hours 2 nd AY 0 hours prior AY 6 hours 2 nd AY Assumes completed all spring hrs Assume Summers part of 10/11 award year First Scheduled Award Full-Time

58. Summer 2010 50% Paid 9 Hours Completed Fall 2010 50% Paid 6 Hours Completed First Scheduled Award Summer 2011 Enrolled in 6 Hours NOT ELIGIBLE 0% paid 2nd Scheduled Award Assumes Academic Year Defined as 24 hours Semester Hours Completed Spring 2011 Enrolled in 9 hours NOT ELIGIBLE 0% paid 9 hours prior AY 0 hours 2 nd AY 6 hours prior AY 0 hours 2 nd AY Assumes completed only 3 spring hrs Assume Summers part of 10/11 award year First Scheduled Award Full-Time

59. Two Scheduled Awards Same Payment Period Payment Period Award may included Payment from 1 st Scheduled Award and 2 nd Scheduled Award if –Student is eligible for 2 nd scheduled (690.67) and –Payment due student > 1 st scheduled award amount Calculated Payment = 1 st Scheduled Award Balance + Amount from 2 nd Scheduled Award = Students Payment for Payment Period

60. Two Pells: Same Payment Period Summer 2009 Enrollment Status 9 hours Three-Quarter Award Amount $2,006 % of Scheduled Award Used 37.5% Remaining Eligibility 162.5% Fall 2009 12 hours Full-time $ 2,675 50% 112.5% Spring 2010 12 hours Full-time $2,675 ($ 669 – from 1 st $2006 – from 2 nd ) 50% 62.5%

61. Operational Considerations

62. COD and Year-Round Pell New field added to COD record –Additional Eligibility Indicator (AEI) School sets AEI to “true” on origination record when awarding any part of second scheduled award AEI student will not trigger POP MRR but will trigger concurrent enrollment MRR

63. COD and AEI Your Student Name Big Valley State University 1111111111 01/20/10 Value = Yes or No

64. Updating COD and AEI Click hear to access the AEI Update field Step 1 : Click: -Person -Pell -Award Detail -Update Award John Q JonesAny University 222222222Pell DOB 1/21/198810/11

65. Updating COD and AEI Click on the box to set flag Step 2 : Must check the AEI box to set the flag And receive your funds! $$$$$$$$

66. View the AEI Flag Your Student Name Big Valley State University 1111111111 01/20/10 Value = Yes or No

67. Additional Eligibility Indicator Checkbox EDE Express

68. NSLDS and AEI on ISIR Added to ISIR record The valid content for these fields are: –Y = Student received additional Pell award funds in excess of a single year’s award –N = Student received a single Pell award New 2010-11

69. Final Reminders Schools can not ignore –Crossover payment periods –Intersessions Must pay eligible students Must implement, regardless of software limitations –Process manually, if necessary

70. Maximum Duration of Eligibility First-time Pell recipients –Beginning with 2008-09 and after –Pell eligibility limited to 18 semesters –Department equivalent is 9 scheduled awards –900% of life-time Pell eligibility –Students enrolled less than full-time will be assessed at the fractional enrollment status –LEU Lifetime Eligibility Used flag

71. Maximum Duration of Eligibility Fall 2009 TQT Fall 2010 HT Summer 2014 FT Fall 2014 FT Spring 2015 FT Fall 2008 FT Spring 2009 FT Spring 2010 TQT Summer 2010 TQT Student’s Pell disbursements based Percentage Used on enrollment status per payment period 787.5% (cumulative) = 100% Summer 2011 HT Fall 2011 HT Fall 2015 FT Summer 2015 FT 200% Spring 2016 FT Summer 2016 FT Fall 2016 FT 112.5% 75% 150% Spring 2017 FT Summer 2017 FT 150% = = = = = 2008-09* 2009-10 2014-15 2010-11 2015-16 2016-17 * First time received Pell

72. Recent Regulatory and Guidance Changes

73. Recent Regulatory and Guidance Changes Not-for-profit servicers sought – June 1, 2010 Untaxed unemployment compensation (PJ EA May 21, 2010) EA June 3, 2010 – Servicer Delinquency Prevention Activities DCL GEN-10-07 – Battered Immigrants-Qualified Aliens eligible for Title IV DCL GEN-10-08 – Institutional requirements for combating unauthorized of use of copyrighted material

74. Recent Regulatory and Guidance Changes DCL GEN-10-09 – New textbook regulatory guidance DCL GEN-10-10 – Q&A on 100% DL (will be posted shortly) Federal Register (Vol. 75, No. 109, June 8, 2010) – ISIR/SAR processing deadlines TILA questions – 202-452-3667 (Federal Reserve Board Help Desk) or brent.lattin@frb.gov

75. Fixed Rates for Loans Disbursed on or after 7-1-2006 Loan TypeGrade LevelFirst Disbursed Between 7-1-2009 and 6-30-2010 First Disbursed Between 7-1-2010 and 6-30- 2011 Subsidized LoansUndergraduate Graduate 5.60% 6.80% 4.50% 6.80% Unsubsidized LoansUndergraduate Graduate 6.80% PLUS LoansParent and Grad Student 7.90% for DL and 8.50% for FFEL

76. Variable Rates for Loans Disbursed Between 7-1-1998 and 6-30-2011

77. Contact Information Contact me at: Michael C. Roberts 404-974-9313 michael.roberts@ed.gov Contact my supervisor at: Thomas Threlkeld 617-289-0144 thomas.threlkeld@ed.gov