HEA Reauthorization: Looking for Direction

1. HEA Reauthorization: Looking for Direction 2005 MASFAP Fall Conference The Lodge of the Four Seasons Presenter: Laurie Wolf Des Moines Area Community College

2. Higher Education Act of 1965 “An Act to strengthen the educational resources of our colleges and universities and to provide financial assistance for students in postsecondary and higher education.” Lyndon B. Johnson January 4, 1965

3. Time Line 2006 2000 2003 2004 2005

4. Environment • War • Economy • Budget Cuts • ‘No Child Left Behind’ Themes  Accessibility  Affordability  Accountability  Quality

5. Environment (cont.) • Supreme Court Appointments • Hurricane Katrina • Hurricane Rita • Legislator Scandals Partisanship

6. Activity to Date • NASFAA recommendations • Hearings • Testimony to Committees • White Papers • Introduction of Bills • HELP Committees Bills Approved • House Markup (H.R. 609) – July 22 • Senate Markup (S. 1614) – September 8 • Three month extension

7. Normal Next Steps • Floor Consideration – House • Floor Consideration – Senate • Conference Committees • Review and Debate of Conference Report • Send to the President for Approval • Regulatory Process/Negotiated Rulemaking

8. What’s in the Bills?

9. HOUSE Increase max awards to $6,000 for 2006-07 Year-round Grants 18 semester eligibility Repeals Pell Grant “tuition sensitivity” requirement SENATE Decreases max award to $5,100 for 2006-07; provides for a $300 per year increase for the next four years. Year-round Grants 18 semester limit Pell Grant Current law: The authorized maximum award for 2003-04 was $5,800.

10. HOUSE Creates enhances Pell Grants Plus Achievement Grants for State Scholars program that would provide a $1,000 bonus for Pell Grant eligible students who participate in the “State Scholars” program of study in high school. SENATE Establishes Provisional Grant Assistance Program (ProGAP) Provides additional grants to Pell eligible students. New Grant Program Proposals

11. HOUSE Math & Science Honors Scholarships Competitive awards to students pursuing BA, MA, PhD in science and engineering. Loan forgiveness SENATE National SMART Grants Provide up to $1,500 per year to Pell eligible students in their third or fourth year of study, who are majoring in math, science, engineering, or a foreign language critical to national security. New Grant Program Proposals (cont.)

12. HOUSE Formula Phases out base guarantees and creates “fair share” allocation process over 10 years SEOG Authorizes $799M for FY2006, and such funds as may be necessary for succeeding five years SENATE Formula Maintains current allocation formula SEOG Authorizes such funds as may be necessary for FY06 and succeeding five fiscal years Campus Based Aid Programs

13. HOUSE Work-Study Authorizes $1B for FY2006, and such funds as may be necessary for succeeding five years Perkins Loan Authorizes $250M for FY2006, and such funds as may be necessary for succeeding five years SENATE Work-Study Provides waiver for 7% community service requirement Authorizes such funds as may be necessary for FY06 and succeeding five fiscal years Perkins Loan Authorizes such funds as may be necessary for FY06 and succeeding five fiscal years Campus Based Aid Programs (cont.)

14. HOUSE Increase annual limits: Undergraduates: $5,000 Graduates: $8,000 Increases aggregate limit: Undergraduate: $27,500 Graduate: $60,000 SENATE Maintains current law Perkins Loan Program

15. HOUSE Borrowing Limits Increases undergraduate annual limits: 1st year: $3,500 2nd year: $4,500 Increases unsubsidized annual limits for graduates: $12,000 SENATE Borrowing Limits Increases undergraduate annual limits: 1st year: $3,500 2nd year: $4,500 Increases unsubsidized annual limits for graduates: $12,000 Stafford Loan Program No expansion to aggregate borrowing limits.

16. HOUSE Phases down borrower paid fees in Direct to 1%, but raises fee to 3% in 2006 prior to phase down Phases out 3% fee in FFEL by 2010 Requires collection of 1% FFEL guarantee fee SENATE Permits Secretary to set Direct fee from 1-3% Maintains current FFEL 3% fee Lenders retain ability to pay fee for borrowers Requires collection of 1% FFEL guarantee fee Origination Fees

17. HOUSE Eliminates provision in current law that changes variable to fixed 6.8% after July 1, 2006 Retains current variable rate capped at 8.25% SENATE Retains provision in current law that will convert the interest rate on Stafford and Consolidation loans to a fixed 6.8% after July 1, 2006 Interest Rates

18. HOUSE Allows borrowers to choose either fixed or variable rates Rate capped at 8.25% Permits ‘reconsolidation’ or refinancing for borrowers seeking income-contingent repayment or who are consolidating a defaulted loan SENATE Retains current fixed interest rate, but increases the origination fee paid to 1% No provision for ‘reconsolidation’ or refinancing Consolidated Loans

19. HOUSE Reinstates expired provisions with low student loan default rates to allow them to waive the 30-day disbursement delay and to disburse loan proceeds in one disbursement to new students. SENATE Reinstates expired provisions with low student loan default rates to allow them to waive the 30-day disbursement delay and to disburse loan proceeds in one disbursement to new students. Loan Disbursements

20. HOUSE Repeals single holder rule but requires borrower to consult with current loan holder when consolidating SENATE Repeals single holder rule Single Holder Rule

21. HOUSE Creates a new 2-year forbearance Repeals ‘3-times rule” Loan forgiveness for teachers Creates loan forgiveness for: nurses, early child- hood educators, math & science teachers SENATE Creates new loan forgiveness condition in Direct Loan program for public sector employees Loan Repayment and Forgiveness

22. HOUSE Clarifies only applies to Stafford loans for graduate and professional students Requires use of all institutional revenue to be used for need-based aid SENATE Imposes a moratorium on new schools; allows current schools to continue Requires use of all institutional revenue to be used for need-based grant aid School As Lender

23. HOUSE Maintains experimental sites for the administration of federal student loans at institutions with successful programs SENATE Permits, but does not require, the Secretary the authority to continue successful experimental sites at participating institutions Experimental Sites

24. HOUSE Expands ‘auto zero’ to families or students who receive benefits under certain mean-tested federal benefit programs Creates new ‘EZ FAFSA’ Increases income protection allowance to $3,000 for employed dependent students SENATE Expands ‘auto zero’ to families or students with adjusted gross income less than $20,000 Creates new ‘EZ FAFSA’ Increases income protection allowance to $3,000 for employed dependent students Needs Analysis

25. HOUSE Permits states to accredit institutions Establishes new accreditation review standard Requires public disclosures of agency actions Expands the due process provisions in current law SENATE No provision on states accrediting institutions No provision on board of governance Requires public disclosures of agency actions Expands the due process provisions in current law Accreditation

26. HOUSE Requires institutions to have a transfer of credit policy and to make it publicly available Must include a statement that the transfer of credit is not solely denied on the basis of the accrediting agency of the sending institution SENATE Requires institutions to make public their transfer of credit policies Which must include (1) a statement that the transfer of credit is not solely denied based on the accrediting agency of the sending institution, and (2) a list of institutions with which the institution has a transfer articulation agreement Transfer of Credit

27. HOUSE Repeals the 50% rule SENATE Maintains the 50% rule 50% Rules on Distance Education

28. HOUSE Creates a single definition. SENATE Maintains current law Two definitions of institutions for nonprofit and proprietary Definition of Institution

29. HOUSE No similar provisions SENATE Requires institutions to report on ‘student body diversity’, including information on the percentage of enrolled, full-time students who are (1) male, (2) female, (3) form a low-income background, and a self-identified member of a major racial or ethnic group Student Information Reporting Requirements

30. HOUSE No similar SENATE Requires institutions to report to the Department information on employment placement of graduates and graduates that enroll in graduate education Alumni Reporting Requirements

31. HOUSE Requires collection of additional information by the Department Creates a College Affordability Index Provisions for institutions who fail to comply SENATE Requires the Department to collect and provide public information about costs of attendance College Costs

32. HOUSE Clarifies current law Applies only to enrolled students who are receiving Title IV Aid and are convicted SENATE Clarifies current law Applies only to enrolled students who are receiving Title IV Aid and are convicted Drug Offenses

33. HOUSE The sense of the Congress – universities ‘should facilitate the free and open exchange of ideas’ and that students should not be ‘discriminated against’ and should be ‘treated equally and fairly’ SENATE No similar provision Non-Student Aid Provisions

34. What’s Not • STAR Proposal • Switching use of tax tables to an Income Protection Allowance (IPS) calculation to assess family contribution • Limited Return of Title IV changes Legislation is in state of flux – changes taking place behind the scenes.

35. What Should the Aid Community Be Doing? • Track Bills • Be aware of SAVINGS RAIDINGS!!!!! • Research effects of proposed changes to your campus and students • Get acquainted with members of your Congressional Delegation • Watch for call for action from NASFAA, MASFAA and State Federal Issues contacts

36. Restore the Intent of HEA “An Act to strengthen the educational resources of our colleges and universities and to provide financial assistance for students in postsecondary and higher education.” Lyndon B. Johnson January 4, 1965