Reauthorization for GP – What Are The Issues?

1. Reauthorization for GP – What Are The Issues? Tami Sato - Marshall B. Ketchum University (MBKU) Vicki Shipley - National Council of Higher Education Resources (NCHER) WASFAA Annual Conference April 14, 2014

2. Agenda – Let’s Talk! • Reauthorization 2008 – Then and Now • Reauthorization 2014(?) – Lay of the Land • For GP - It’s All About Loans • Reauthorization Themes • Reauthorization 2014(?) – What’s on Your Wish List? • UG Issue, Possible GP Issue • Other Things to Watch • What’s Next? Make Some Noise!

3. Then and Now • State higher-education spending $80b to $71b • Average tuition/fees at 4-yr publics - $6.8k to $8.6K • Number of questions on paper FAFSA – 98 to 102 • Consumers have more information • Lawmakers and families questioning value of a college degree Source: Center for the Study of Education Policy, College Board

4. Consolidated Appropriations Act of 2014 • Signed into law January 17th • FY 2014 Appropriations • Maximum Pell Grant for AY 2014/15 = $5,730 • $85 increase • Increase in recipients from 9.1 million to 9.3 million • Direct Loan Origination Fee Increases Remain in Place • Loans first disbursed on/after 12/1/2013 • Stafford 1.072% • PLUS 4.288%

5. Consolidated Appropriations Act of 2014 • FWS: $974,728,000 • $49,133,000 increase • $2 million below pre-sequester level • SEOG: $733,130,000 • $36,955,000 increase • $1.5 million below pre-sequester level

7. Student Loan Interest Rates Bipartisan Student Loan Certainty Act of 2013 Interest Rate Determined Based on Final Auction of 10-year U.S Treasury Bills prior to June 1 *Assumption: 10-year T-Bill rate = 2.70 percent

8. Fiscal Year 2014 Outlays

9. President’s FFY 2015 Budget Proposal - New Stuff • Pay As You Earn (PAYE) Repayment Plan • Proposal to make all FFELP and Direct Loan borrowers eligible • For new borrowers on or after 7/1/2015, PAYE would be the only income-driven repayment option • Modify PAYE formula to eliminate unintended benefits for high income, high balance borrowers • Proposal to limit Public Service Loan Forgiveness to $57,500 (aggregate limit for independent undergraduates) • “…protect against institutional practices that may further increase student indebtedness” • Establish 25-year forgiveness for amounts above $57,500 • Counting only payments made via an income-driven repayment plan towards PSLF • Proposal to make Allloan forgiveness amounts exempt from taxation

10. College Board – Trends Report

11. College Board – Trends Report

12. For GP – It’s All About Loans • Is reform needed of the Income-Driven Repayment (IDR) plans? Should IDR be automatic? • Keep Perkins for GP (only subsidized loan left)? • Should DL unsubsidized go to COA limit? • Why are DL interest rates higher for graduate students? • If student loans make a profit for the government – where should the profits go?

15. Reauthorization of the Higher Education Act – Timeframes? • Hearings still underway in House and Senate • Senate accepting public input on current hearing topics • Possible release of DRAFT bills this year? • Legislative action is unlikely, but not impossible • Possibility House Education and the Workforce Committee could consider a bill • Maybe 2015? 2016? 2017?.... • Process is complicated by pending retirements of Sen. Tom Harkin & Rep. George Miller • Rep. John Kline is technically term-limited

16. Reauthorization Themes • Simplify - One loan program/one grant program • Funding tied to cost reduction/success • Automatic Income-Based Repayment • Accountability and transparency • Reining in abuses in student loan system • Simplify - One tax credit • Streamline FASFA/apply through tax return • Better consumer information – more disclosures • Interest rates may, again, be on the table • Serving “contemporary” students • Student loan servicing • Institutional risk sharing on student loans

17. What’s On Your Wish List? • Maintain campus-based programs? • Restore students’ eligibility for subsidized loans? • Retain tax-free treatment for cancelled or forgiven loans? • Exclude graduate schools from R2T4? • Consumer information – restrict to undergrads or allow flexibility in tailoring?

18. UG Issues, Possible GP Issue • Added fields in COD for 150% Rule • Net Pricing Calculator extended to GP schools? • Shopping Sheet Mandatory? • College Rating Plan • Gainful Employment NPRM – Expanded disclosures

19. Other Things to Watch • Negotiated Rulemaking • Campus Crime Changes • Program Integrity (additional issues on fraud, debit cards, disbursements, state authorization, GP PLUS adverse credit) • Telephone Consumer Protection Act • Gaps in student and borrower services • President’s College Rating System

20. Student Loan Borrower Bill of Rights Act • Introduced by Senators Durbin, Warren and Boxer • Aims to reform disclosure and servicing standards for both federal and private student loans • To ensure student loan borrowers understand the full range of repayment options available to them • Would grant the CFPB authority to regulate Title IV loans

21. Reform Needed? • Telephone Consumer Protection Act (TCPA) • Income Driven Repayment Plans (e.g. Income-Based Repayment - IBR) • Student and borrower services • What’s on your list? • Make some noise!

22. What’s Next? Make Some Noise!Thank you! Questions/Comments? Comments???