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2010 COHEAO Mid-Year Conference July 27, 2010

2010 COHEAO Mid-Year Conference July 27, 2010 Department of Education Update Brian Smith Office of Postsecondary Education Agenda Appropriations & Program Budget Legislative Update Transitioning to the Direct Loan Program Regulatory Update Perkins Loan Issues

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2010 COHEAO Mid-Year Conference July 27, 2010

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  1. 2010 COHEAO Mid-Year ConferenceJuly 27, 2010 Department of Education Update Brian Smith Office of Postsecondary Education

  2. Agenda • Appropriations & Program Budget • Legislative Update • Transitioning to the Direct Loan Program • Regulatory Update • Perkins Loan Issues

  3. Appropriations and Program Budget

  4. Title IV Program BudgetAppropriations 4

  5. Title IV Program BudgetAid Available In thousands 5

  6. 2011 Obama Administration Budget Proposal • Reliable Pell Grants – make Pell Grant funding mandatory (not subject to annual appropriations) • Index future Pell maximum awards to consumer price index plus 1 percentage point

  7. 2011 Obama Administration Budget Proposal • End entitlement subsidies to Federal Family Education Loan Program lenders on all new loans as of July 1, 2010 • Consolidate Federal student loans under William D. Ford Direct Loan Program • Increases efficiency • Less expensive • Savings finance higher Pell Grants

  8. 2011 Obama Administration Budget Proposals • Modernize and Expand Perkins Loan Program • 2.7 million additional students served • More colleges could participate under new funding formula • Reward schools that enroll and graduate low and middle-income students • Department of Education would originate and service all loans

  9. 2011 Obama Administration Budget Proposals • Reduce maximum monthly payments under the Income-Based Repayment (IBR) Plan from 15% to 10% of a borrower’s income • Forgive balance of loan paid under IBR after 20 years in repayment instead of 25 years

  10. 2011 Obama Administration Budget Proposals • Simplify process for applying for student aid by eliminating questions from the Free Application for Federal student Aid • Simplified process will complement efforts to make online application faster and easier, partly by using IRS data to help answer questions.

  11. Legislation

  12. Health Care & Education Reconciliation Act (HCERA) of 2010 • HCERA (H.R. 4872) combined key elements of the Administration’s healthcare and higher education budget proposals • Passed the House of Representatives and the Senate on March 25, 2010 • Signed into Public Law 111-152 on March 30, 2010

  13. Health Care & Education Reconciliation Act (HCERA) of 2010 • PELL GRANTS • Maintains distinction between mandatory and discretionary Pell Grant funding • Appropriates $13.5 billion to cover projected shortfalls through FY 2012 • Increases mandatory funding based on “estimated” changes to the consumer price index

  14. Health Care & Education Reconciliation Act (HCERA) of 2010 • Funds the College Access Challenge Grants • Extends funding for programs that help low-income students attain degrees in STEM fields at HBCUs and Minority Serving Institutions

  15. Health Care & Education Reconciliation Act (HCERA) of 2010 • STUDENT LOAN REFORM • Ends origination of FFELP loans as of July 1, 2010 = 100% Direct Loan • Borrowers who have Direct Loans, FFEL Loans, or loans purchased by ED under ECASLA may consolidate into the Direct Loan Program between July 1, 2010 and July 1, 2011

  16. Health Care & Education Reconciliation Act (HCERA) of 2010 • STUDENT LOAN REFORM (CONT.) • Schools outside the U.S. authorized to participate in the Direct Loan Program • Non-profit state entities can be eligible for Direct Loan servicing contracts in the State in which they are located • Effective July 1, 2014, new borrowers qualify for IBR if borrower’s standard repayment exceeds 10% of discretionary income. IBR payment amount lowered to 10% of discretionary income.

  17. Health Care & Education Reconciliation Act (HCERA) of 2010 • STUDENT LOAN REFORM (CONT.) • Provides $50 million to ED to provide technical assistance to institutions participating or seeking to participate in the Direct Loan Program • Appropriates $500 million annually in the Community College and Career Training Grant Program. • NO CHANGES TO THE PERKINS LOAN PROGRAM

  18. Health Care & Education Reconciliation Act (HCERA) of 2010 Direct Loan Contact Information COD: CODSupport@acs-inc.com Direct Loan Website: • http://www.direct.ed.gov/participating.html More information: • Email to DLEnrollment_FSA@ed.gov • Email to wood.mason@ed.gov

  19. American Recovery & Reinvestment Act of 2009 (ARRA) • Public Law 111-5 – $787 billion economic stimulus plan enacted February 17, 2009 • Overall goals of ARRA are to stimulate the economy in the short term and invest in education and other essential public services to ensure the long-term economic health of our nation.

  20. American Recovery & Reinvestment Act of 2009 (ARRA) • The ARRA Pell grant and work study funding for school year 2009–2010. Funds were available, pending disbursement, beginning July 1, 2009. • Pell Grants—$17.1 billion. Increases the maximum Pell award for all eligible students from $4,850 to $5,350. • Work Study—$200 million.

  21. Recent Legislation • Higher Education Opportunity Act (reauthorization of HEA) enacted August 14, 2008 – P.L. 110-315 • HEOA technical amendments enacted July 1, 2009 – P.L. 111-39 • Ensuring Continued Access to Student Loans Act of 2008 (ECASLA) – P. L. 110-350: Go to www.ifap.ed.gov ECASLA link for more information

  22. Regulatory Update

  23. Final Rules on Loan Issues Effective July 1, 2010 • Establishes a three-year cohort default rate for FFEL/Direct Loans • Beginning with FY 2009 CDR, institutional CDRs calculated based on a three fiscal year monitoring period • Replaces current two-year calculation • Expands Entrance and Exit counseling

  24. Final Rules on Loan Issues Effective July 1, 2010 • Program Participation Agreement • Code of Conduct • Preferred Lender Lists • Private Education Loan Certification • Required education loan borrower disclosure by IHEs & institution-affiliated organizations

  25. Final Rules on Loan Issues Effective July 1, 2010 • Required borrower disclosures by covered institutions and institution-affiliated organizations that participate in a preferred lender arrangement • Direct Loan borrower disclosures by Direct Loan schools

  26. Final Rules on Loan Issues Effective July 1, 2010 • Perkins Loan Program • Expansion of teacher, Head Start, and law enforcement cancellations (HEOA section 465) • Addition of new public service cancellation categories (HEOA section 465) • Military service cancellation (HEOA Section 465)

  27. Final Rules on Loan Issues Effective July 1, 2010 • Perkins Issues Direct-to-Final: • Loan Limits • Forbearance • Rehabilitation • Transfer of FWS allocation to Perkins

  28. Final Rules on Loan Issues Effective July 1, 2010 • Disclosures to Perkins Loan borrowers who consolidate: • Borrower will lose all interest-free periods associated with a Perkins Loan • Borrower will no longer be eligible for cancellation benefits • Lender must list occupations contained in HEA section 465 that qualify for cancellation

  29. Final Rules on Loan Issues Effective July 1, 2010 • Total and Permanent Disability loan discharge if the borrower is: • Unable to engage in any substantial gainful activity because of a physical or mental impairment that is expected to result in death, has lasted for a continuous period of not less than 60 months, or can be expected to last for a continuous period of not less than 60 months or • If the borrower is determined by the VA to unemployable due to a service-connected disability

  30. 2009 Negotiated Rulemaking • Public hearings and forums: • Community College of Denver • University of Arkansas at Little Rock • Community College of Philadelphia • Negotiations began November 2009 in Washington, D.C. • http://edocket.access.gpo.gov/2009/E9-12092.htm

  31. 2009 Negotiated Rulemaking • Topics for negotiated rulemaking: • Foreign schools • Satisfactory academic progress • Definition of credit hour and high-school diploma • Verification • Incentive compensation • Others as identified

  32. 2009 Negotiated Rulemaking NPRMs Published in Federal Register • Program Integrity • Publication date: June 18, 2010 • Comments due: August 2, 2010 • Foreign Schools • Publication date: July 20, 2010 • Comments due: August 19, 2010

  33. Perkins Loan Issues

  34. Expanded Cancellation Categories • Teacher Cancellation—Adds teachers employed by low-income educational service agencies (ESAs) • Head Start Cancellation—Adds pre-k and child care program cancellations • Law Enforcement Cancellation—Adds public and community defenders

  35. Expanded Cancellation Categories An ESA is a regional public multi-service agency authorized by State law to develop, manage and provide services or programs to local educational agencies.

  36. Expanded Cancellation Categories An ESA qualifies as “low income” if more than 30% of the students who receive classroom instruction or classroom-type instruction from teachers employed by the ESA are Title I eligible.

  37. Expanded Cancellation Categories A state-by-state listing of ESAs is available at: http://www.aesa.us/esa_links.html Not all ESAs listed here are low-income. State education agencies will list low-income ESAs on the low-income school directory.

  38. Expanded Cancellation Categories • A pre-kindergarten program is: — State-funded — Serves children birth through age six — Addresses cognitive, social, emotional and physical development of children

  39. Expanded Cancellation Categories • A child care program is: — Licensed or regulated by the State — Provides child care services (in most cases for fewer than 24 hours per day per child) — May serve children older than six

  40. Expanded Cancellation Categories • Attorney in a public or community defender organization established under Title 18, U.S.C. A Directory of Federal public defender and community defender organizations is available at: http://www.fd.org/odstb_DEF.htm

  41. New Cancellation Categories • Tribal College and University Faculty Members • Firefighters • Librarians • Speech Language Pathologists

  42. New Cancellation Categories • Faculty member (including administrators) employed at a Tribal College or University A Directory of Tribal Colleges and Universities is available at: http://www.bie.edu/home.aspx

  43. New Cancellation Categories • Firefighter employed by a Federal, State, or local firefighting agency to extinguish destructive fires or provide firefighting-related services Volunteer and seasonal firefighters do not qualify. Employment must be full-time for 12 consecutive months.

  44. New Cancellation Categories • Librarian with a master’s degree employed in a Title I elementary or secondary school or in a public library that serves a geographic area with a Title I school The Title I school(s) does not have to be a designated low-income school.

  45. New Cancellation Categories • Speech language pathologist with a master’s degree working exclusively with Title I elementary or secondary schools The speech language pathologist does not have to be directly employed by the Title I school(s).

  46. Contact Information:Brian Smith(202) 502-7551brian.smith@ed.gov

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