A Regulatory extravaganza

1. Betsy Mayotte Presents A Regulatory extravaganza

2. Starring • Latest Regulatory Changes • DC Update • Reauthorization Update and Predictions

3. Also Starring..

4. 150% Rule

5. Agenda • Background • Basics • If, And’s, But’s and Maybe’s • Preparatory Courses • What ED Will Track • What Schools Have to Track • Questions And Words of Encouragement

6. Background • Moving Ahead for Progress in the 21st Century (MAP-21) • Limits subsidy period to 150% of program length • Intended to encourage students to complete programs in a timely manner

7. Who Does It Affect • New borrowers on or after July 1, 2013 • Borrowers with no outstanding Stafford, PLUS or Consolidation loans on or after July 1, 2013 • Perkins loans do not affect trigger • Consolidating pre 7/1/2013 loans does not change eligibility

8. Basics • New Terms • Maximum Eligibility Period (MEP)– 150% of published length of program • Number of days in months/weeks • --------------------------------------------------------------X1.5 • Number of days in academic year • Subsidized Usage Period (SUP) – period of time borrower received direct subsidized loans • Remaining Eligibility Period (REP)– difference between maximum eligibility period and subsidized usage period

9. Basics • Borrowers may only receive interest subsidy for 150% of published length of program • Includes receiving new subsidized Stafford loans and • Interest subsidy on existing loans

10. Basics • If borrower exceeds maximum eligibility period (MEP): • Borrower may not borrow additional subsidized Stafford Loans • Interest will accrue on existing loans beginning on day borrower exceeds MEP and will continue to accrue during • Grace periods • Deferment periods • In-school periods • Eligible IBR periods

11. Basics • Borrower is considered to have exceeded maximum eligibility period if: • They are enrolled 150% of the program length and • Do not complete the program and • Continue to be enrolled in that program or • Transfer to another program of equal or shorter length

12. Calculating the Subsidized Usage Period • Measured in years: • Number of Days in Loan Period • ----------------------------------------------------------- • Number of days in academic year • Rounded down to nearest quarter • Count only if borrower received Subsidized Loan during timeframe • Can be prorated in certain circumstances

13. Calculating the Subsidized Usage Period • Amount of loan not relevant – one exception: • Student receives full subsidized annual loan limit for less than academic year: • SUB = 1

14. Calculating the Subsidized Usage Period • Example: • 1. Academic year September 1 – May 15th = 258 days • Loan period September 1 – May 15th = 258 days • 258/258 = SUB of 1 year • 2. Academic year September 1 – May 15th = 258 days • Loan period September 1 – December 15th = 107 days • 107/258 = .41% rounded down to .25 year SUB usage • Unless.. • Borrower receives full annual sub loan limit then.. • SUB usage = 1 year

15. Calculating the Subsidized Usage Period • Proration occurs when: • Enrollment status is less than full time • ¾ time enrollment: SUB x .75 • ½ time enrollment: SUB x .50 • Example: • Academic year September 1 – May 15th = 258 days • Loan period September 1 – May 15th = 258 days • 258/258 = SUB of 1 year • Borrower is only ¾ time: • 1 x .75 = SUB of .75

16. Remaining Eligibility Period - REP Maximum Eligibility Period (150% of program length) - Subsidized Usage Periods ------------------------------------------------------- Remaining Eligibility Period

17. Remaining Eligibility Period - REP Example 1: Borrower enrolled in 1 year program: MEP = 1.5 years Borrower receives subsidized loans in this program for 1.5 years – does not complete. SUB = 1.5 years Borrower transfers to 4 year program: MEP = 6 years - SUB of 1.5 years ---------------------------------------------------------------------- REP = 4.5 years

18. Remaining Eligibility Period - REP Example 2: Borrower enrolled in 4 year program: MEP = 6 years Borrower receives subsidized loans in this program for 1.5 years – does not complete. SUB = 1.5 years Borrower transfers to 1 year program: MEP = 1.5 years - SUB of 1.5 years ---------------------------------------------------------------------- REP = 0 years

19. Remaining Eligibility Period - REP Example 3: Borrower enrolled in 1 year program: MEP = 1.5 years Borrower receives subsidized loans in this program for 1 year SUB = 1 years Borrower transfers to 1 year program: MEP = 1.5 years - SUB of 1 years ---------------------------------------------------------------------- REP = .5 years

20. Effect to Subsidy Benefits • Borrowers lose eligibility for interest subsidies when: • They have reached the 150% of the allowable subsidized usage period AND • They did not complete the program AND • They continue at least half time enrollment in that program OR • They enroll in a new program of equal or lesser program length

21. Effect to Subsidy Benefits • Borrower loses: • Eligibility for new subsidized Stafford loans • Eligibility for further subsidy on existing loans • Is not retroactive • Borrower responsible for interest regardless of further borrowing • Lost subsidies cannot be recaptured • Loans that lose subsidy eligibility remain Subsidized Stafford loans

22. Effect to Subsidy Benefits • Examples: • 4 year program, borrower attends and receives subsidized loans for 4 years, does not complete program SUP = 4 years • Borrower transfers to another 4 year program, completes after 3 more years of receiving sub loans • Interest begins accruing beginning of year 7 • Borrower transfers to two year program • Interest begins accruing 1st year of that program

23. Effect to Subsidy Benefits • Examples: • 4 year program, borrower attends and receives subsidized loans for 4 years, does complete program SUP = 4 years • 3. Borrower enrolls in two year program • Interest does NOT begin accruing on prior loans • Borrower has no further subsidized loan eligibility

24. Effect to Subsidy Benefits • Examples: • 2 year program, borrower attends and receives subsidized loans for 3 years, does not complete program SUP = 3 years • 4. Borrower transfers to 4 year program • Interest does NOT begin accruing on prior loans • Borrower has 3 more years of REP

25. Effect to Subsidy Benefits • Examples: • 2 year program, borrower attends and receives subsidized loans for 4 years, does not complete program SUP = 3 years • 4. Borrower transfers to 4 year program • Interest continues to accrue on prior loans • Borrower has 3 more years of REP

26. Preparatory Courses • Preparatory courses for Undergrad enrollment count towards the total MEP allowed for the undergrad program itself • 150% rule does not supersede 12 month max allowed for prep courses to receive federal aid • Preparatory courses for graduate school based on borrowers most recent undergrad program of study • If max SUP is used, no new Subsidized loans but interest will not accrue on prior loans

27. Teacher Certification Courses • Teacher certification courses where credential is awarded by school treated the same as other undergrad or grad • Teacher certification courses where credential is not awarded by school treated separately from other SUP periods • Total of all TCC considered when determining MEP • TCC subsidy usage not considered when totally other undergrad subsidy usage • Exceeding subsidy usage for TCC does not cause interest to accrue

28. What ED Will Track • The Department will track and report to you a students: • Subsidized usage period • Whether they are a new 7/1/2013 borrower • Loss of subsidy • Maximum eligibility period • Remaining eligibility period • Loss of subsidy benefits (NSLDS)

29. What You (Schools) Will Track • Schools must report to COD • SAY/BBAY dates • Loan period dates • Changes to these dates • Do not include summer header/trailers unless borrower is receiving subsidized loans for that period • Effective for all loans 1st disbursed on or after July 1, 2013 • Regardless if borrower is affected by subsidy rules

30. What You (Schools) Will Track – this year • When reporting enrollment, schools must report to NSLDS: • Credential level • Indicate if prep or teacher prep course • Length of program in years, months or weeks • CIP code

31. What You (Schools) Will Track – next year • Schools must report to COD • Same items as prior year plus • Enrollment “level” (full time, half time, etc) • Credential level • Program flag • CIP code • Length of program • Effective for all loans 1st disbursed on or after July 1, 2013 • Regardless if borrower is affected by subsidy rules

32. Counseling • For new borrowers on or after July 1, 2013 schools must • Provide “robust” entrance counseling about 150% rule prior to 1st disbursement • Schools “encouraged” to provide info to affected borrowers who receive counseling prior to 7/1/2013 • 5/16/2013 announcement contains materials • Will be added to Direct Loan entrance counseling October, 2013

33. Questions? Resources • ED Q and A http://ifap.ed.gov/150PercentDirectSubsidizedLoanLimitInfo/FAQ.html • NASFAA Q and A (login may be required) http://www.nasfaa.org/Main/orig/2013/Your_Questions_Answered__The_150_Percent_Rule.aspx • DCL on reporting requirements • http://www.ifap.ed.gov/dpcletters/GEN1313.html • May 16th announcement – includes counseling requirements • http://www.ifap.ed.gov/eannouncements/051613DirectSubsidizedLoanLimit150PercentAnnounce1.html • DCL overviewing 150% rule • http://www.ifap.ed.gov/eannouncements/062013DirectSubsidizedLoanLimit150PercentEA2.html

34. 2013-2014 Negotiated rulemaking(s)

35. Student Loan Neg Reg • Effective July 1, 2014 • Post-270 day forbearance • Rehabilitation of defaulted loans • Administrative Wage Garnishment • Closed School Discharge • Transfer of credits • Regaining Title IV eligibility

36. PLUS Loans • NPRM for PLUS released • Draft rule would allow loan approval for borrowers with one or more debts with a total combined outstanding balance greater than $2,085 that: • are 90 or more days delinquent as of the date of the credit report, or • have been placed in collection or charged off (as defined earlier in paragraph (c)(1)) during the two years preceding the date of the credit report • Borrower who have successful appeal must complete loan counseling

37. Other Neg Reg Topics • Cash management • Addresses how funds are delivered to students • Goal to ensure student choice, transparency and no fees for federal aid delivery • Introduces “sponsored account” • Sets framework for ED delivery mechanism

38. Other Neg Reg Topics • State authorization of distance education • State authorization of foreign locations of US schools • Retaking coursework • Clock to credit hour conversion

39. Other New Rules and Reminders

40. NSLDS Reporting • Student enrollment must be reported at: • Academic program level • Institutional (campus) level • Program level retroactively to July 1, 2014 • Schools must report no less than once every two months • Effective for all submissions to NSLDS on or after October 1st, 2014

41. High School Diplomas • Clarifies that for these purposes, there is not such thing as an “online GED program” only an online GED test • Must have test results or transcripts from GED publisher showing test scores • Certificate of high school completion not sufficient • High schools do not have to be accredited, but diplomas must be recognized by the state the school is located in • Clarifies that you can admit a student who doesn’t have a diploma • Must be beyond compulsory age • Cannot award aid • Foreign diplomas ok if comparable to U.S. secondary school • School can use outside foreign diploma service to do this evaluation

42. Interest Rates • New rate structure applies to all loans first • disbursed on or after July 1, 2013. • Annual fixed rates based on 10 Year T-Bill, • plus margin. • Applies to loans first disbursed between • July 1 and June 30. • Rate applies for the life of the loan.

43. Origination Fee • Subsidized and Direct Unsubsidized Loan Fee • 1.072 percent for loans first disbursed on or after December 1, 2013 and before October 1, 2014; • 1.073 percent for loans first disbursed on or after October 1, 2014 and before October 1, 2015. • Direct PLUS Loan Fee • 4.288 for loans first disbursed on or after December 1, 2013 and before October 1, 2014 • 4.292 percent for loans first disbursed on or after October 1, 2014 and before October 1, 2015

44. Defense of Marriage Act • Expands definition of marriage to include same sex couples • Who are married in a jurisdiction that recognizes the marriage • Place of celebration rule • Place of resident not relevant • Does not change non-married couples living together regardless of state recognition (domestic partnerships etc.)

45. Defense of Marriage Act • As of December 13, 2013 • Students submitting the 2013-2014 FAFSA for the first time list themselves or parents legally married if they are in fact legally married • Students who have already submitted the 2013-2014 FAFSA: • If parent or student wishes to update status you MUST allow • Associated 2013-2014 package changes must also occur

46. Gainful Employment • Background • GE programs defined as: • Proprietary institutions – • All programs, except for - • Liberal Arts Undergraduate degree Preparatory non-certificate coursework necessary for enrollment in an eligible program • All other institutions • Non-degree programs of less than two years other than preparatory coursework

47. Gainful Employment* ANZFAA 2014 *Chart by ACE

48. Washington Update

49. Default Rates • National rate reduced from 14.7% to 13.7% • Foreign school rate reduced from 4.6% to 3.8% • ED made adjustments for some split-servicing borrowers

50. Presidents Higher Education Initiative • “A Better Bargain for the Middle Class – Making College More Affordable • Paying for Performance • Promoting Innovation and Competition • Ensuring that Student Debt Remains Affordable”