Overview of Federal and State Programs

ILASFAA Annual Conference April 16-18, 2008 Overview of Federal and State Programs April 2008

Federal U. S. Department of Education (ED) www.ed.gov Higher Education Act (HEA) of 1965, as amended Title IV Programs Federal Register Free Application for Federal Student Aid (FAFSA) Master Promissory Notes State Illinois Student Assistance Commission (ISAC) www.collegezone.com Higher Education Student Assistance Act Scholarships, Grants, Loans and 529 Prepaid Tuition Plan Administrative Rules Free Application for Federal Student Aid (FAFSA) Program-Specific Applications Sources of Financial Aid ILASFAA Annual Conference April 16-18, 2008

About ED • Mission: to ensure equal access to education and promote educational excellence • Establishes financial aid policies • Enforces federal statutes and ensures equal access • TRIO Programs • Reauthorization • Process through which legislation is adapted to meet changing needs of education ILASFAA Annual Conference April 16-18, 2008

Recent ED Legislation • Higher Education Reconciliation Act (HERA) of 2005 • Final regulations were published on Nov. 1, 2007 • College Cost Reduction and Access Act (CCRAA) • Some provisions were effective Oct. 1, 2007 • Other provisions go into effect in 2008 and 2009 • Negotiated rulemaking process is underway • Benefits to students • Pell Grant increases • TEACH Grants • Student loan interest rate reduction • Expanded loan forgiveness • Revised deferments ILASFAA Annual Conference April 16-18, 2008

General Title IV Eligibility Criteria • U.S. citizen or eligible noncitizen • High school diploma, GED or equivalent • Valid Social Security Number • Register with Selective Service • Seeking a degree or certificate • Maintain satisfactory academic progress • Not be in default on a student loan or owe money on a federal student grant ILASFAA Annual Conference April 16-18, 2008

Database Matches • Social Security Administration (SSA) • SSN match • Master Death File match • Citizenship match • Department of Homeland Security (DHS) • Verifies eligible noncitizen status • Selective Service • Verifies registration with Selective Service • National Student Loan Data System (NSLDS) • Checks for loan defaults, borrowing in excess of loan limits, and overpayments of Title IV funds • Department of Veterans Affairs (VA) • Confirms student’s claim to be independent based on his or her veteran status • Department of Justice (DOJ) • Identifies applicants who are debarred from Title IV funds because of drug conviction ILASFAA Annual Conference April 16-18, 2008

Grant Programs Federal Pell Grant Academic Competitiveness (AC) Grant National Science and Mathematics Access to Retain Talent (SMART) Grant Teacher Education Assistance for College and Higher Education (TEACH) Grant Campus-Based Programs Federal Supplemental Educational Opportunity Grant (FSEOG) Federal Work-Study (FWS) Federal Perkins Loan Student Loans Federal Family Education Loan (FFEL) Program Federal Direct Loan (DL) Program Federal Title IV Programs ILASFAA Annual Conference April 16-18, 2008

Pell Grant Program • Foundation of financial aid package • Portable • Unaffected by student’s other aid • Can be used for any educational expense • Awarded to students with lowest EFCs • Available to undergraduate students • Less-than-half-time students are eligible ILASFAA Annual Conference April 16-18, 2008

Pell Grant Program • 2007-08 maximum award: $4,310 • Minimum award: $400 • Maximum EFC to be eligible for an award: $4110 • Mandatory funding will increase maximum appropriated Pell Grant award by: • $490 in 2008-09 and 2009-10 • $690 in 2010-11 and 2011-12 • $1,090 in 2012-13 • 2008-09 maximum award: $4,731 • $4241 appropriated amount + $490 • Minimum award: $523 • $400 + proportionate amount of additional funding • Maximum EFC to be eligible for an award: $4041 ILASFAA Annual Conference April 16-18, 2008

AC Grant Program • Recipient must be Pell-eligible and a U.S. citizen • Eligible noncitizens do not qualify • For students in first and second year of a program of undergraduate education • Student must be enrolled full-time • Award amount dependent upon grade level: • $750 for the first academic year • $1,300 for the second academic year ILASFAA Annual Conference April 16-18, 2008

AC Grant Program • Student must have completed a rigorous secondary program of study after January 1, 2006, if a first-year student and after January 1, 2005, if a second-year student. • Rigorous programs include: • State Scholar Initiatives or other approved state programs • Advanced or Honors Diploma Program • Advanced Placement or International Baccalaureate courses (2 or more) • Required set of courses if no state program: • 4 years of English • 3 years of Math • 3 years of Science • 3 year of Social Studies • 1 year of foreign language • Second-year student must have a cumulative GPA of at least 3.0 (on a 4.0 scale) at the end of the first academic year of undergraduate education. ILASFAA Annual Conference April 16-18, 2008

National SMART Grant Program • Recipient must be Pell-eligible and a U.S. citizen • For students in third and fourth year of an eligible program of undergraduate education • Student must be in a designated major • Student must be enrolled full-time and in at least one course required for their major • Award amounts: • $4000 for the third academic year • $4000 for the fourth academic year ILASFAA Annual Conference April 16-18, 2008

National SMART Grant Program • Student must be: • Pursing an eligible major in physical, life, or computer sciences, engineering, technology, mathematics or a critical-need foreign language (as determined by the Director of National Intelligence). • Have a cumulative GPA of at least 3.0 (on a 4.0 scale). ILASFAA Annual Conference April 16-18, 2008

TEACH Grant • Effective for 2008-09 • Awards up to $4,000 a year for: • students who plan on becoming teachers • teachers who are obtaining graduate degrees • Aggregate maximums • $16,000 for first baccalaureate student • $8,000 for graduate student ILASFAA Annual Conference April 16-18, 2008

TEACH Grant • Eligibility requirements • Be enrolled as an undergraduate, post-baccalaureate, or graduate student at an institution that has chosen to participate in the TEACH Grant Program. • Be enrolled in coursework that is necessary to begin a career in teaching or plan to complete such coursework • Meet certain academic achievement requirements • scoring above the 75th percentile on a college admissions test, or • maintaining a cumulative GPA of at least 3.25. • Sign a TEACH Grant Agreement to Serve • Grant converts to a Direct Unsubsidized Stafford Loan if teaching commitment is not met ILASFAA Annual Conference April 16-18, 2008

TEACH Grant • Teaching requirements of the TEACH Grant Agreement to Serve • Serve as a full-time teacher for four academic years within eights years of completing course of study • Teach at a public or private elementary or secondary Title I school • Meet requirements of a highly-qualified teacher • Teach in a field designated as high-need (e.g. math, science, special education) ILASFAA Annual Conference April 16-18, 2008

FSEOG Program • Eligibility criteria: • Undergraduate students with exceptional financial need (lowest EFCs) • Priority given to Federal Pell Grant recipients • Available to full-time and part-time students • Annual amounts: • $100 minimum • $4,000 maximum • $4,400 maximum for certain study abroad students ILASFAA Annual Conference April 16-18, 2008

Federal Work-Study Program • Eligibility criteria: • Undergraduate, graduate or professional students • Available to full-time and part-time students • May include periods of nonattendance (e.g., summer session) if student plans to re-enroll in next regular enrollment period ILASFAA Annual Conference April 16-18, 2008

Federal Perkins Loan Program • Eligibility criteria: • Undergraduate, graduate or professional students • Priority given for students with exceptional financial need, as defined by school • Determination of Federal Pell Grant eligibility (if undergraduate student) • Available to full-time and part-time students ILASFAA Annual Conference April 16-18, 2008

Federal Perkins Loan Program • Annual loan limits: • $4,000 for undergraduates • $6,000 for graduate or professional students • Aggregate loan limits: • $8,000 if not yet completed 2 years of undergraduate study • $20,000 if completed 2 years of undergraduate study • $40,000 for graduate or professional students • May exceed annual and aggregate limits by 20% if reasonable study abroad costs exceed home school’s costs • Interest rate = 5% • Interest does not accrue until student enters repayment following 9-month grace period • No loan fees ILASFAA Annual Conference April 16-18, 2008

FFEL and Direct Loan Programs • Stafford Loans • Subsidized • Need-based • Interest paid by federal government during in-school, grace and deferment periods • Unsubsidized • Not need-based • Interest accrues during in-school, grace or deferment periods • PLUS • For parents of dependent undergraduate students and graduate and professional students • Consolidation Loans • Allows borrowers to combine multiple loans into one loan ILASFAA Annual Conference April 16-18, 2008

FFEL and Direct Loan Programs • Key Differences: • FFEL • Private lenders provide capital • Guaranty agencies insure loans • Federal government reinsures guaranty agencies • Direct Loan Program • Federal government provides loan funds ILASFAA Annual Conference April 16-18, 2008

FFEL and Direct Loan Programs • Student borrower must: • Be enrolled at least half time • Be a regular student, except for certain teacher certification programs and preparatory course work • Have determination of Federal Pell Grant eligibility • Not be incarcerated • Meet certain requirements if a prior loan was discharged due to total and permanent disability • Student for whom PLUS is borrowed must meet general student eligibility criteria ILASFAA Annual Conference April 16-18, 2008

FFEL and Direct Loan Programs • Annual loan limits apply to academic year • Aggregate limits apply according to dependency and degree level ILASFAA Annual Conference April 16-18, 2008

FFEL and Direct Loan Programs • Interest rates • Stafford Loans • Disbursed on or after 7/1/06 – fixed rate of 6.8% • Disbursed prior to 7/1/06 -- variable interest rates set each July 1, not to exceed 8.25% • PLUS Loans • Disbursed on or after 7/1/06 – 8.5% for FFELP & 7.9% for DL • Disbursed prior to 7/1/06: variable rate not to exceed 9.0% • Consolidation Loans • Based on the weighted average of loans being consolidated, rounded to nearest 1/8th of 1%, not to exceed 8.25% ILASFAA Annual Conference April 16-18, 2008

FFEL & Direct Loans: Interest Rate Reductions • For Subsidized Stafford Loans made to undergraduate students, rate reduces to: • 6% for loans first disbursed 7/1/2008 – 6/20/2009 • 5.6% for loans first disbursed 7/1/2009 – 6/30/2010 • 4.5% for loans first disbursed 7/1/2010 – 6/30/2011 • 3.4% for loans first disbursed 7/1/2011 – 6/30/2012 • Unsubsidized loan interest rate will remain at current fixed rate of 6.8% ILASFAA Annual Conference April 16-18, 2008

FFEL & Direct Loan Fees • FFEL • Stafford origination fees are being reduced each year until phased out • 1.00% for loans disbursed on or after July 1, 2008 • PLUS origination fee – 3% • Default fee of 1% • For 2008-09, ISAC will pay one half of the fee (.5%) on behalf of the borrower • Direct Loan • Stafford origination fees are being reduced each year until at 1.0% • 2.0% for loans disbursed on or after July 1, 2008 • PLUS origination fee – 4% • No default fee ILASFAA Annual Conference April 16-18, 2008

Packaging Priorities • Pell grant is always awarded first, before all other federal student aid. • Academic Competitiveness and SMART grants must go to Pell grant recipients who also meet academically related criteria. • Priority for FSEOG must be given to Pell grant recipients who have the lowest EFCs. • Perkins loan funds must be awarded to students who show exceptional financial need, as defined by the school. • Federal Work Study in combination with other aidmust not exceed the student's need. ILASFAA Annual Conference April 16-18, 2008

Loan Forgiveness for Public Service Employees • New program, effective July 1, 2008 • Balance of principal and interest forgiven on direct loans to borrowers working in public service sector • Loan can be forgiven after 120 payments have been • For payments made after 10/1/2007 • Program is for non-defaulted Direct Loan borrowers only • FFEL borrowers may consolidate into DL to receive benefit ILASFAA Annual Conference April 16-18, 2008

Loan Forgiveness for Public Service Employees • Must repay under any combination of: • Income-based repayment • Income-contingent repayment • 10-year standard repayment • Any DL repayment based on 10-year repayment amounts • Must be employed in public service during 120-payment period • Must be employed in public service job at time of forgiveness ILASFAA Annual Conference April 16-18, 2008

About ISAC • Mission: making college affordable for Illinois students • Products and services • State and federal gift assistance programs • Federal and alternative loan programs • 529 prepaid tuition program • Outreach efforts for students and families • Training and technology for partners • Default prevention for borrowers • Secondary market services • College Zone Network ILASFAA Annual Conference April 16-18, 2008

Institutional Eligibility • To participate in ISAC Programs, institutions must: • Be a postsecondary institution located in Illinois • Offer a program of collegiate study that leads to a degree or certificate • Have a valid Program Participation Agreement with ED • Complete an ISAC Program Participation Agreement and be approved by ISAC to participate ILASFAA Annual Conference April 16-18, 2008

ISAC Program Participants Lists of the Illinois postsecondary schools approved to participate in each ISAC program are made available for each academic year. ILASFAA Annual Conference April 16-18, 2008

ILASFAA Annual Conference April 16-18, 2008

ISAC Eligibility Requirements for Students • Must meet federal eligibility requirements • Must be an Illinois resident • Can not be incarcerated • Must meet program-specific requirements ILASFAA Annual Conference April 16-18, 2008

Residency Requirements • For a dependent student: • The parent who is required to complete the FAFSA must physically reside in Illinois and Illinois must be his/her fixed and permanent home • For an independent student: • Must reside in Illinois at the time of application • Must have resided in Illinois for 12 continuous full months prior to the start of the academic year for which assistance is requested • Illinois must be his/her fixed and permanent home ILASFAA Annual Conference April 16-18, 2008

Verifying Eligibility • Students selected for federal verification must also be verified for ISAC programs. • Acceptable documentation for verifying Illinois residency includes: • Income tax returns • Illinois driver’s license • Rent or utility or bills • Schools must also verify that students are meeting satisfactory academic progress when payment is requested from ISAC. ILASFAA Annual Conference April 16-18, 2008

Monetary Award Program (MAP) • Need-based grant • ISAC’s largest program • Annually awards more than $380 million • Pays tuition and mandatory fees • 2007-08 maximum annual award is $4,968 • 2008-09 estimated maximum annual award is $4,968 ILASFAA Annual Conference April 16-18, 2008

MAP Terminology • MAP Formula • method used to distribute appropriated funds • a “start-up” formula is established each spring • A “recompute” formula is applied after appropriations have been finalized • MAP Suspension • point at which projections indicate that appropriations have been exhausted • can occur prior to the published MAP priority consideration dates • For 2007-08, announcement of MAP grants was suspended for students whose initial 2007-08 FAFSA was received on or after August 16, 2007 ILASFAA Annual Conference April 16-18, 2008

MAP Terminology • MAP Paid Credit Hours (MPCH) • Method used to track students’ usage of MAP benefits • Based on credit hours in which they are enrolled • Eligible students may receive a maximum of 135 MPCH • Equivalent of 4½ years of full-time enrollment • Students must reach junior level status before they can use more than 75 MPCH • Helps to ensure that students have at least 60 MPCH for upper level courses ILASFAA Annual Conference April 16-18, 2008

MAP Process • FAFSA is the application for MAP • Priority consideration dates: • August 15 for continuing applicants • September 30 for first-time applicants • Key data elements • State of legal residence (student and parent) • Grade level • Type of degree the student is working on • At least one school choice needs to be an Illinois school ILASFAA Annual Conference April 16-18, 2008

MAP Process • ISAC • receives FAFSA data from CPS and determines eligibility • sends a general acknowledgement letter to students • Schools • receive eligibility and award information via MAPnet • notify students about award amounts and changes in eligibility status • request payment on behalf of the student ILASFAA Annual Conference April 16-18, 2008

MAP Payment • Schools request payment via MAPnet • Payment amount is based on the number of credit hours in which a student is enrolled • Proration methodology: • Multiply student’s maximum annual amount by a fraction: • Number of hours enrolled is the nominator and 15 hours is the denominator • Example: $2,000 x 12/15 = $1,600 for a student enrolled in 12 credit hours • Award amount is then divided by the number of terms • Example: $1600/2 semesters = $800 per term ILASFAA Annual Conference April 16-18, 2008

ILASFAA Annual Conference April 16-18, 2008

MAP Payment Claim Deadlines • Approved by the Commission at the beginning of each school year • Payment claim deadlines for 2007-08 are: • January 10, 2008 -- 1st semester/2nd quarter • April 1, 2008 -- 2nd semester/quarter • June 1, 2008 -- 3rd quarter/2nd semester for institutions where the second semester begins after February 15 ILASFAA Annual Conference April 16-18, 2008

MAP Reconciliation • Schools must: • Credit a student’s account within 30 days of receiving their MAP funds • Reconcile payments and make adjustments in MAPnet • Send refunds owed to ISAC within 30 days of the end of the school’s year • Refund checks should not be sent to ISAC during the school year ILASFAA Annual Conference April 16-18, 2008

Silas Purnell Illinois Incentive for Access (IIA) Grant • Need-based grant program • Requires completion of the FAFSA • Available to freshmen with 0 – 500 EFC • Award amounts, subject to appropriations: • Up to $1,000 for applicants with 0 EFC • Up to $500 for applicants with 500 EFC or less • For 2008-09, schools should award at the $500 level for students with 0 EFC ILASFAA Annual Conference April 16-18, 2008

Silas Purnell Illinois Incentive for Access (IIA) Grant • Award may be used for any expense used to calculate the cost of attendance • Illinois residency verification requirements, payment process and claim deadline dates are the same as those for MAP • As with MAP, suspension can also occur • For 2007-08, announcement of IIA grants was suspended for students whose initial 2007-08 FAFSA was received by the CPS on or after August 7, 2007. ILASFAA Annual Conference April 16-18, 2008

Military Programs • Illinois Veteran Grant (IVG) Program • Illinois National Guard (ING) Grant Program ILASFAA Annual Conference April 16-18, 2008

Illinois Veteran Grant (IVG) Program • Entitlement program • Awarded to all eligible applicants regardless of funding level • Available at all four-year public universities and public community colleges • No minimum enrollment requirement • Pays tuition and mandatory fees • Eligible students receive four full academic years of benefits (120 units) • Must be factored into the financial aid package prior to receiving MAP gift assistance ILASFAA Annual Conference April 16-18, 2008

Overview of Federal and State Programs