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Federal Update : Everything but HEOA. Presented by Zack Goodwin – Harvard University Financial Aid Compliance and Training Officer Bernie Pekala – Boston College Director of Student Financial Strategies November 20, 2008. Agenda. College Cost Reduction and Access Act (CCRAA) of 2007
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Federal Update:Everything but HEOA Presented by Zack Goodwin – Harvard University Financial Aid Compliance and Training Officer Bernie Pekala – Boston College Director of Student Financial Strategies November 20, 2008
Agenda • College Cost Reduction and Access Act(CCRAA) of 2007 • Ensuring Continued Access To Student Loans Act (ECASLA) of 2008 • Post-9/11 Veterans Educational Assistance Act of 2008
College Cost Reduction and Access Act (CCRAA) • Signed into law September 27, 2007;many provisions were effective October 1 • Budget reconciliation measure
Pell GrantsSecs. 101, 102(a) and 102(b) • Eliminated tuition sensitivity as of July 1, 2007 • Increases the maximum authorized amount: • $4,800 for award years 2008-2009 and 2009-2010 (increase of $490 over 2007-2008) • $5,000 for award years 2010-2011 and 2011-2012 (increase of $690) • $5,400 for the 2012-2013 award year (increase of $1,090)
Teacher Education Assistance for College and Higher Education (TEACH) GrantsSec. 104Final Rules Published June 23, 2008 • New grant program for current or prospective teachers attending eligible institutions, effective July 1, 2008 • Grants may be made up to $4,000 per academic year • $16,000 maximum for undergraduate degreeor post-baccalaureate program • $8,000 maximum for master’s degree
TEACH Eligibility • Minimum GPA of 3.25 on a zero to 4.0 scale OR • Scored above the75th percentile on at least one battery of an undergraduate, post-baccalaureate, or graduate school admission test AND • (for bachelor’s degree or post-baccalaureate program) completing or plans to complete coursework and other requirements necessary to begin a career in teaching • (for master’s degree) is a teacher or retiree from another occupation with expertise in a field in which there is a shortage of teachers
TEACH Recipient Obligations • Serve as a full-time “highly qualified” teacher for at least 4 academic years within 8 years after completing education • Teach in a public or other qualified nonprofit private elementary or secondary school • Teach in a high-need field OR ELSE…the TEACH Grant(s) are converted to unsubsidized Direct Loan(s) with interest applied retroactively
College Access Challenge Grant ProgramSec. 801 • New 2-to-1 matching grant program for States and qualifying philanthropic organizations in each of the fiscal years 2008 and 2009 • In Massachusetts, the State Departments of Elementary/Secondary Education and Higher Education will partner with the Massachusetts Educational Financing Authority (MEFA) to develop a ‘College and Career Web Portal’
The Massachusetts College and Career Web Portal will offer students, parents and counselors: • Practice exams and tutorials for standardized tests • Virtual campus tours • Assistance in completing the FAFSA • Grant and scholarship research tools • College application and letter of recommendation tracking tools • High school transcript electronic submission tool
Need AnalysisSec.104 • Set specific increases in the student Income Protection Allowance (IPA) for years 2009-2013 • Applies to dependent and independent students • After 2012-2013, IPA is thereafter tied to the Consumer Price Index • Parent IPA is linked to the Consumer Price Index as of 2009-2010 • Expanded eligibility for the Simplified Needs Test and the Automatic Zero EFC • Eliminated consideration of certain untaxed income
Economic Hardship DefermentSec. 304(a)Final Rules Published October 23, 2008 • Changed from 100% of the poverty line for a family of two to 150% of the poverty line depending on borrower’s family size • Debt burden criterion for the deferment was eliminated (though maintained by the Secretary through June 30, 2008)
Military DefermentSecs. 202, 204Final Rules Published October 23, 2008 • Available to FFELP, Direct Loan and Perkins borrowers regardless of disbursement date • 3-year limit on military deferment removed • Deferment extended 180 days following demobilization
Income-Based Repayment Plan Sec. 203Final Rules Published October 23, 2008 • Borrower can request that payments do not exceed15% of difference between borrower’s AGI and 150% of the poverty line for her/his family size, divided by 12 • Parent PLUS borrowers are not eligible for this plan, including borrowers with consolidation loans that have underlying parent PLUS loans
Income-Based repayment Plancontinued… • Borrower’s eligibility evaluated annually • Education Department pays interest on subsidized loans for the first 3 years • Remaining balance of loan canceled after 25 years if the borrower made consistent monthly payments under a regular or reduced repayment plan or was in economic hardship deferment • Effective Date: July 1, 2009
Public Service Loan ForgivenessSecs. 203, 401Final Rules Published October 23, 2008 • Balance of interest and principal forgiven after 120 payments, beginning October 1, 2007 • Amount forgiven will not be taxable • Borrowers must: • Not be in default • Make their 120 monthly payments in Direct Lending (FFEL borrowers must consolidate in DL) • Be working in public service at the time of each payment and at loan cancellation • Repay their loans under the income-based, standard, and/or income-contingent plans
What Is Public Service? • Employment by a nonprofit, tax-exempt 501(c)(3) organization • Employment by the federal government, a state government, local government, or tribal government (including the military and public schools and colleges) • Service in a full-time AmeriCorps or Peace Corps position OR • The Department of Education's regulations created a two-part test of other circumstances under which students may still be eligible: • The employer is not "a business organized for profit, a labor union, a partisan political organization, or an organization engaged in religious activities, unless the qualifying activities are unrelated to religious instruction, worship services, or any form of proselytizing" AND • The employer provides any of the following public services: emergency management; military service; public safety; law enforcement; public interest law services; early childhood education; public service for individuals with disabilities and the elderly; public health; public education; public library services; and school library or other school-based services
Loan Interest Rate ReductionSec. 201(a) • Phased-in rate reduction for undergraduate subsidized Stafford Loans (FFELP and Direct) from 6.8 % to 3.4% over 4 years • 6.0% on or after July 1, 2008 and before July 1, 2009 • 5.6% on or after July 1, 2009 and before July 1, 2010 • 4.5% on or after July 1, 2010 and before July 1, 20011 • 3.4% on or after July 1, 2011 and before July 1, 2012
Lender/Guarantor ImpactsSecs. 301, 302, 305, 306, 701 • Reduced guaranty agency collection retention and account maintenance fees • Reduced lender insurance percentage and Special Allowance Payments • Increased lender origination fees • Eliminated Exceptional Performer Status
Lender/Guarantor Impactscontinued… • Created PLUS Loan auction pilot program • Auction will determine what lenders will be eligible to originate all parent PLUS Loans made to new borrowers as of July 1, 2009 • Two winners per state • The Secretary will plan and implement the auction program in consultation with the FCC and Department of the Treasury • UPDATE-See NASFAA News Release dated 11/13/08
Professional Judgment • Dependency Overrides • May be based on decision of other school • Allows for emancipated minors • Allows for orphans, foster children and wards of the court at any time from age 13 onward • Adds dislocated worker and homeless statuses to areas meriting professional judgment
Ensuring Continued Access to Student Loans Act (ECASLA) • Original legislation (2008-2009) signedMay 7, 2008 • One year extension (2009-2010) signedOctober 7, 2008
Goals of ECASLA • Ensure availability of FFEL and Direct student loans for 2009-2010 • Uphold the public/private partnership • Protect taxpayer interests (no net costs) • Provide liquidity and support needed to stabilize the student loan marketplace
Programs of ECASLA • Purchase of Participation Interests (PPI) • Loan Purchase (PUT) • The Conduit (New-11/10/08) • Liquidity support to conforming Asset-Backed Commercial Paper (ABCP) conduits
Post 9/11 Veterans Educational Assistance Act of 2008 (New GI Bill) • Became law on May 7, 2008
Details of the New GI Bill • Entitlement (Section 3311): Two years of active duty with some after 09/10/08 • Duration (Section 3312): 4 academic years which equals 36 months
Details of the New GI Bill continued… • Payment (Section 3313): • Up to the most expensive in-state tuition • Monthly living/housing stipend • Annual $1,000 book/supplies stipend • All or some benefits to be paid directly to school • Tutorial Assistance (Section 3314): $100/month up to a maximum $1,200
Details of the New GI Bill (cont.) • Licensure Payment (Section 3315): Up to $2,000 for one licensing/certification • Tuition Assistance-Private (Section 3317): Up to 50% of the cost greater than the most expensive public program • Transfer of Unused Benefits (Section 3319): Allows transfer to spouse 6(+4) and/or child (10) years of service
Resources • www.ifap.ed.gov • thomas.loc.gov • edlabor.house.gov • help.senate.gov • www.nasfaa.org • www.aau.edu • www.gibill2008.org • www.ibrinfo.org