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Fall 2008 Federal Update

Fall 2008 Federal Update. Agenda. Budget Update Legislative Update Regulatory Update Perkins Loan Issues NSLDS Reporting FISAP Electronic Announcements. Budget - Appropriations. FY 2009 Budget Policy. Provide for “Year-round” Pell Grants Establish a “Lifetime Limit” for Pell

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Fall 2008 Federal Update

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  1. Fall 2008 Federal Update

  2. Agenda • Budget Update • Legislative Update • Regulatory Update • Perkins Loan Issues • NSLDS Reporting • FISAP • Electronic Announcements

  3. Budget - Appropriations

  4. FY 2009 Budget Policy • Provide for “Year-round” Pell Grants • Establish a “Lifetime Limit” for Pell • Implement Consent-Based IRS/FAFSA Data Matching • Provide Loans for Short-Term Training • Modify Public Service Loan Forgiveness • Eliminate the Income-Based Repayment Three-Year Interest Subsidy • Recall Federal Share of Perkins Loans

  5. Higher Education Opportunity Act – H.R. 4137 (Reauthorization) • July 29 – House and Senate Conferees approve H.R. 4137 • July 31st -- House passes H.R. 4137 by a vote of 380 to 49 • July 31st -- Senate passes H.R. 4137 by a vote of 83 to 8 • President Bush signed H.R. 4137 into law on 8/14/08

  6. HEA Reauthorization – H.R. 4137Overview • Accreditation • Advisory Committee selected by House, Senate and ED Secretary. No appointments until after 1/31/09. • Prohibits ED Secretary from establishing criteria to assess student achievement • Consumer Information & Disclosure • Greater transparency on college costs • Disclosures for IHEs with preferred lender lists

  7. HEA Reauthorization – H.R. 4137Overview • Pell Grants • Provides for year-round Pell Grants • Limits eligibility to 18 semesters • Sets EFC to $0 for students whose parent was in Armed Forces and died in Iraq or Afghanistan after 9/11/01 • ACG/SMART • Technical changes on ECASLA provisions

  8. HEA Reauthorization – H.R. 4137Overview • Student Loans • Requires ED to oversee private education loans made by FFEL lenders to students attending Title IV institutions • Expands loan forgiveness if Congress appropriates funds • Makes foreign nursing schools eligible to participate in the FFEL program • FAFSA Simplification

  9. HEA Reauthorization – H.R. 4137Overview • Maintenance of Effort (MOE) – Withholds College Access Challenge Grant (old SLEAP Program) funds from States that failed to raise spending on higher ed each year by at least as much as they increased it, on average, over the last five years.

  10. HEA Reauthorization – H.R. 4137Overview • Settlement of Claims • Settlements for any claims exceeding $1 million must be reviewed by Attorney General • New Programs and Reports • Over 60 new programs authorized and more than 20 new studies must be completed

  11. HEA Reauthorization – H.R. 4137 Federal Perkins Loan Program • Amends HEA §428C(b)(1) to require 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

  12. HEA Reauthorization – H.R. 4137 Federal Perkins Loan Program • Amends HEA §463(a)(4)(B) – Secretary may allow institutions to refer Perkins Loans to the Department for collection. Any sums collected must be repaid to the institution (minus collection costs) as additional FCC. • Amends HEA §463(a)(9) to prohibit the Secretary from mandating assignment other than as provided in §463(a)(4) and (5).

  13. HEA Reauthorization – H.R. 4137 Federal Perkins Loan Program • Amends HEA §464(a) to: • Increase annual loan limits to $5,500 for undergraduate students • Increase annual loan limits to $8,000 for graduate/professional students • Increase aggregate loan limits for undergraduate students to $27,500 • Increase aggregate loan limits for graduate/professional students to $60,000 • Increase aggregate loan limits to $11,000 for “any other student”

  14. HEA Reauthorization – H.R. 4137 Federal Perkins Loan Program • Amends HEA §464(c)(1)(F) to require the Secretary to cancel a Perkins Loan if the borrower is: • Permanently and totally disabled • 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

  15. HEA Reauthorization – H.R. 4137 Federal Perkins Loan Program • Amends HEA §464(c)(1)(F) to: • Allow Secretary to develop regulations safeguarding against fraud and abuse in TPD discharges • Allow Secretary to develop regulations to resume collection on loans discharged for TPD if the borrower receives a new Title IV loan or earns income in excess of the poverty line • Effective July 1, 2008

  16. HEA Reauthorization – H.R. 4137 Federal Perkins Loan Program • Amends HEA §464(e) to remove requirement that a forbearance request be in writing • Requires terms of forbearance to be documented by confirming the agreement with borrower by notice and recording terms in the borrower’s file. • Amends HEA §464(h)(1)(A) to require 9 on-time payments to successfully rehabilitate a defaulted Perkins Loan

  17. HEA Reauthorization – H.R. 4137 Federal Perkins Loan Program • Amends HEA §465(a)(2) to extend cancellation benefits to Perkins Loan borrowers who are: • teachers in low-income educational service agencies (including special ed teachers) • Full-time staff in a pre-kindergarten or child care program licensed or regulated by a State • Full-time lawyers employed by a public defender organization • Full-time fire fighters

  18. HEA Reauthorization – H.R. 4137 Federal Perkins Loan Program • Amends HEA §465(a)(2) to extend cancellation benefits to Perkins Loan borrowers who are: • Full-time faculty members at a Tribal college or University • Librarians with a Master’s degree in Library Science employed in a low-income school or a public library serving low-income schools • Full-time speech language pathologists with a Master’s degree working with low-income children

  19. HEA Reauthorization – H.R. 4137 Federal Perkins Loan Program • Full cancellation benefits (100%) over give years for members of the Armed forces serving in areas of hostility • Sense of Congress: • “The Federal Perkins Loan program is an important part of Federal student aid and should remain a campus-based aid program at colleges and Universities.”

  20. HEA Reauthorization – H.R. 4137 Federal Perkins Loan Program • Amends HEA §484A to require that: • Perkins Loans are not subject to a defense based on a claim of infancy • Obligation to title IV aid does not apply to deceased students, a deceased student’s estate or the estate of such student’s family. • Amends HEA §485(b)(1)(A) to expand exist counseling requirements for FFEL, Direct and Perkins Loans

  21. Ensuring Continued Access to Student Loans Act (ECASLA) • Public Law 110-227 • Enacted May 7, 2008 • Addresses concerns about student loan access problems created by recent disruptions in credit markets • Increases annual and aggregate Stafford Loan Limits • Makes changes to the PLUS Loan & ACG/SMART Grant Programs

  22. ECASLA – Lender of Last Resort • All FFEL loan types, except Federal Consolidation Loans, must be made under an LLR Program • All LLR loans must be made with statutory maximum interest rate, origination fee, and default fee • Secretary may designate entire schools as LLR eligible through June 30, 2009 • GAs and lenders are prohibited from violating inducement provisions or marketing LLR loans

  23. ECASLA – Loan Purchases by ED • Department of Education given authority to purchase from FFEL lenders Stafford and PLUS loans first disbursed on or after October 1, 2003 and before July 1, 2009 • Authority expires on July 1, 2009 • Represents temporary measure to provide capital for student loan market

  24. ECASLA – PLUS Loan Eligibility • Extenuating circumstances in determining PLUS loan eligibility for parent and grad/prof student applicants during period between 1/1/007 and 12/31/09: • Borrower has been or is delinquent for 180 days or less on mortgage payments or medical bills • Borrower has not or is not more than 89 days delinquent on repayment of any other debt

  25. ECASLA – Parent PLUS Borrowers • PLUS Loans disbursed on or after July 1, 2008: • Option to enter repayment either 60 days after disbursement or 6 months after dependent student falls below half-time • Accrued interest is capitalized for borrowers who do not delay repayment • Borrowers may repay accrued interest before entering repayment if they opt to delay repayment

  26. ECASLA – Loan Limits • Increases unsubsidized Stafford annual limit by $2,000 for undergraduate dependent students • Increases additional unsubsidized Stafford annual limits by $2,000 for dependent students whose parents are unable to borrow a PLUS loan

  27. ECASLA – Loan Limits • Increases the additional unsubsidized Stafford annual limits by $2,000 for independent undergraduate students • Increases additional unsubsidized Stafford Loan limit by $2,000 for preparatory coursework for enrollment in undergraduate programs

  28. ECASLA – Loan Limits • Increases aggregate unsubsidized loan amounts for undergraduate dependent students from $23,000 to $31,000 • Increases aggregate unsubsidized loan amounts for undergraduate independent students from $46,000 to $57,500

  29. ECASLA – ACT/SMART Grants • Eliminates restriction to U.S. citizens • Allows awards to students enrolled less than full-time but at least half-time, with proportionally reduced maximum awards • Requires awarding of grants and making of payments to be on the same basis as the Pell Grant Program • Provides that awards are based on the student’s grade level instead of academic year

  30. 2007-2008 Negotiated Rulemaking • CCRAA Implementation • Rules effective for 2009-2010 & subsequent award years, except TEACH • Two committees established • TEACH Grant • Loan Issues

  31. 2007-2008 Negotiated Rulemaking • TEACH Grant Negotiations • 3 Sessions of Negotiations • January 8-10, 2008 • January 22-24, 2008 • February 6-8, 2008 • NPRM published March 21, 2008 • Final Regulations published June 23, 2008 • Negotiated Rulemaking website: • http://www.ed.gov/policy/highered/reg/hearulemaking/2008/index2008.html

  32. 2007-2008 Negotiated Rulemaking • Loan Negotiations • 4 Sessions • January 14-16 • February 4-6 • March 4-6 • April 15-16 • NPRM published July 1, 2008 • Final expected by November 1, 2008

  33. TEACH GRANT PROGRAM SUMMARY • The TEACH Grant Program is a non-need based program that provides up to $4,000 per year to students enrolled in an eligible program and who agree to teach as a highly-qualified teacher in a high-need field, at a low-income elementary or secondary school for at least four years within eight years of completing the program for which the TEACH Grant was awarded. • If the Grant recipient fails to complete the required teaching service, the TEACH Grant is converted to a Federal Direct Unsubsidized Loan with interest accruing from the date the grant was disbursed.

  34. TEACH Grant Program Final Regulations • Grants of up to: • $4,000 per year for 1st undergraduate or post-baccalaureate degree (up to an aggregate amount of $16,000) • $4,000 per year for graduate degree (up to aggregate amount of $8,000) • TEACH Grants are prorated for less than full-time students • Amount of TEACH Grants, in combination with other assistance, may not exceed the cost of attendance.

  35. TEACH Grant ProgramFinal Regulations • Applicants can be: • Undergraduate students • Graduate students pursuing a Master’s • Students enrolled in a post-baccalaureate teacher credential program or • Current or former teachers or retirees

  36. TEACH Grant ProgramFinal Regulations • TEACH Grant Eligibility – All applicants must: • Meet requirements of 34 CFR 668, Subpart C – General Provisions Student Eligibility • Submit a completed FAFSA • Sign an Agreement to Serve • Enroll in a TEACH Grant-eligible institution in a TEACH Grant-eligible program • Be completing, or intend to complete, coursework necessary to begin a career in teaching • Not have already earned a first BA or post-bac

  37. TEACH Grant ProgramFinal Regulations • TEACH Grant Undergraduate, Post-Bac and Graduate Student Eligibility • Cumulative GPA of at least 3.25 • From high school for first year student or first semester of college • From college for other students • Or above the 75th percentile on one of the batteries of an admissions test, such as: • SAT • ACT • GRE

  38. TEACH Grant ProgramFinal Regulations • TEACH Grant Eligibility for Current/ Former Teachers and Retirees: • Current teachers/retirees must have expertise in a high-need field and be pursuing a master’s degree • Former teachers must be pursuing a certification through a high-quality alternative certification route • Alternative certification must be offered by an eligible institution of higher education and must be part of a Master’s degree program

  39. TEACH GRANT ProgramFinal Regulations • TEACH Grant-eligible Institutions: • Must be financially responsible in accordance with 34 CFR 668, subpart L, or an alternative standard • May establish eligibility in any of 4 detailed in Dear Colleague Letter GEN-08-07 • TEACH Grant-eligible institutions have wide latitude to designate the TEACH Grant eligible programs offered by the institution

  40. TEACH Grant ProgramFinal Regulations • TEACH Grant recipient must sign an “Agreement to Serve” that requires the recipient to: • Teach for four years within 8 years of completing or ceasing enrollment in a TEACH Grant-eligible program as a full-time highly-qualified teacher in— • A low-income elementary or secondary school • A high-need field

  41. TEACH Grant ProgramFinal Regulations • High-need field – • Mathematics • Science • Foreign language • Bilingual education • English language acquisition • Special education • Reading Specialist • Other high-need field documented by local, State or Federal government

  42. TEACH Grant ProgramFinal Regulations • If the Grant recipient fails to complete the required teaching service, the TEACH Grant is converted to a Federal Direct Unsubsidized Loan with interest accruing from the date the grant was disbursed. • Grant recipient will have 30 days from the date of conversion in which to pay accrued interest. Otherwise interest will be capitalized as of the date of conversation.

  43. TEACH Grant ProgramFinal Regulations • A TEACH GRANT recipient whose grant has converted to a Federal Direct Unsubsidized Loan— • Enters repayment immediately • Is eligible for most benefits of the Direct Loan Program, including an in-school deferment and • Is not eligible for any grace period • A TEACH Grant that is converted to a loan cannot reconvert to a TEACH Grant

  44. FINAL RULESPerkins, FFEL & Direct Loans • Simplification of Deferment Process • Secretary may grant a deferment based on information from a FFEL holder • FFEL holder may grant a deferment based on information from the Secretary or another FFEL holder • Perkins Loan school may grant a deferment based on information from the Secretary, a FFEL holder or another Perkins Loan school

  45. FINAL RULESPerkins, FFEL & Direct Loans • Simplification of Deferment Process (cont.) • Borrower must request deferment verbally or in writing • Holder must grant deferment for same reason and same time period • Holder must have no conflicting information on borrower’s eligibility

  46. FINAL RULESPerkins, FFEL & Direct Loans • Simplified Deferment Process (cont.) • Holder must grant a military deferment based on request from borrower or borrower’s representative with supporting documentation • Holder must provide notice to borrower or representative, if applicable, that deferment has been granted

  47. FINAL RULESPerkins, FFEL & Direct Loans • Loan holders may use an accurate and complete photocopy of a Death Certificate to document death discharge • “Exceptional circumstances” discharge by chief executive officer based on other reliable information unchanged

  48. FINAL RULESPerkins, FFEL & Direct Loans • Total and Permanent Disability (TPD) Discharge • Title IV Loan Program regulations restructured to follow process and clarify eligibility requirements • TPD discharge application must be submitted within 90 days of date physician certifies the form • Borrower’s TPD date defined as physician’s certification date on the application

  49. FINAL RULESPerkins, FFEL & Direct Loans • TPD Discharge (cont.) • Conditional discharge period is prospective starting on the date the physician certifies the borrower’s TPD • Title IV loans or earned income received before date of TPD do not disqualify borrower for discharge • Title IV loans or loan disbursements received after date of TPD disqualify borrower for discharge

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