1 federal update david bergeron dan madzelan. 2 agenda budget legislation where we are today ...
TRANSCRIPT
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Federal Update
David Bergeron Dan Madzelan
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Agenda Budget Legislation
Where We Are Today Student Lending Regulations Implementation
Dear Colleague Letters Regulations
A Rational Approach to Federal Student Aid
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Appropriations andProgram Budget
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FY 2007 FY 2008 FY 2009*(AY 07-08) (AY 08-09) (AY 09-10)
Pell Grant $13,660,711,520 $16,256,000,000 $18,941,100,000 (Max Award) $4,310 $4,731 $4,800
FSEOG $ 770,932,800 $ 757,464,800 -$ FWS $ 980,354,430 $ 980,491,815 $ 980,500,000 Perkins $ 65,470,680 $ 64,327,222 $ - LEAP $ 64,986,570 $ 63,851,677 $ - ACG/SMART $ 850,000,000 $ 395,000,000 $ 960,000,000
* President's FY 2009 Budget Request
Program
Title IV Program Budgets Appropriations
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FY 2008 FY 2009* FY 2009**(AY 08-09) (AY 09-10) (AY 09-10)
Pell Grant $16,256,000,000 $18,941,100,000 $18,851,000,000 (Max Award) $4,731 $4,800 $4,731
FSEOG $ 757,464,800 -$ $ 757,464,800 FWS $ 980,491,815 $ 980,500,000 $ 980,491,815 Perkins $ 64,327,222 $ - $ 64,327,222 LEAP $ 63,851,677 $ - $ 63,851,677 ACG/SMART $ 395,000,000 $ 960,000,000 $ 960,000,000
* President's FY 2009 Budget Request** Consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009 (PL 110-329)
Program
Title IV Program Budgets Status of Appropriations
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Title IV Program Budgets Aid Available ($000)
FY 2008 FY 2009* FY 2009**(AY 08-09) (AY 09-10) (AY 09-10)
Pell Grant $ 17,492,000 $ 18,180,200 $ 20,185,000 (Max Award) $4,731 $4,800 $4,731
FSEOG $ 958,816 $ - $ 958,816 FWS $ 1,171,395 $ 1,171,400 $ 1,171,395 Perkins $ 1,103,398 $ - $ 1,103,398 LEAP $ 161,555 $ - $ 161,555 ACG/SMART $ 700,000 $ 760,000 $ 760,000 TEACH $ 86,000 $ 114,000 $ 114,000 Loans $ 70,345,247 $ 74,536,800 $ 74,536,800 TOTAL $ 92,018,411 $ 94,762,400 $ 98,990,964
* President's FY 2009 Budget Request** Consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009 (PL 110-329)
Program
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Recent Legislation
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Higher Education Reconciliation Act (HERA) – February 8, 2006
College Cost Reduction and Access Act (CCRAA) – September 7, 2007
Ensuring Continued Access to Student Loans Act of 2008 (ECASLA) – May 7, 2008 Extended by HR 6899
Higher Education Opportunity Act (Reauthorization) – August 14, 2008
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Where We Are Today Academic Competitiveness and National
SMART Grants Increased FFEL and DL Loan Limits Interest Rates PLUS Loans Professional Judgment/Dependency
Overrides
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ACG and National SMART Grants Eligible Non-Citizens Eligible At least half-time enrollment Students in certificate programs
eligible, if program is at least one year in length and offered at a two or four-year degree granting institution
Awards based on student’s grade level instead of “academic year”
Effective July 1, 2009 – by HEOA
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Grade LevelBase
AmountAdditional
Unsubsidized
1st-yr Dependent $3,500 $2,000
2nd-yr Dependent $4,500 $2,000
Upper Division Dep. $5,500 $2,000
1st-yr Independent $3,500 $6,000
2nd-yr Independent $4,500 $6,000
Upper Division Indep. $5,500 $7,000
Graduate/Professional $8,500 $12,000
FFEL/DL Annual Loan Limits
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Interest Rates Reduced interest rates on undergraduate
subsidized loans only from current 6.8% to
6.0% for loans disbursed on or after 7/1/2008 5.6% for loans disbursed on or after 7/1/2009 4.5% for loans disbursed on or after 7/1/2010 3.4% for loans disbursed on or after 7/1/2011
Beginning 7/1/2012, rates revert to 6.8% Unsubsidized Stafford Loans and all
Staffords for graduate students remain at 6.8% fixed
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PLUS Loans
Extenuating circumstances for adverse credit may include delinquency of up to 180 days on mortgage payments or on medical bill payments
Delayed repayment start date for parent PLUS borrowers at their option
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Professional Judgment Dependency Overrides Adds dislocated worker and
homelessness as examples of when an FAA can use professional judgment
Provides that an FAA can use a dependency override made by another FAA within the same award year
Both effective for the 2009-2010 award year
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Student Lending
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DL/FFEL Activity for ’08-’09YTD 2008
YTD 2007 % Change
Direct Loans 3.9 million 2.5 million +56%
FFELP Loans 8.7 million 7.7 million +13%
Total 12.6 million 10.2 million +24%
Direct Loans $18.5 billion $12.3 billion +50%
FFELP $46.7 billion $42.6 billion +10%
Total $65.2 billion $54.9 billion +19%
Number of Loans
Dollars
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Student Lending GA Lender of Last Resort
Programs Dear Colleague Letters
ECASLA Loan Purchase Programs www.federalstudentaid.ed.gov/ffelp
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2006-2007 RegulationsSchool Lender Relationships
(Effective 7-1-08)
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FFEL Loan Certification
A school may not: Refuse or delay certification based on
borrower’s choice of lender or GA Assign lender to first-time borrower Refuse to certify or certify a reduced
amount; except on a case-by-case basis Includes “school as lender”
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School may choose to have preferred lender list (includes web processes)
List must have at least 3 unaffiliated lenders Must disclose method/criteria for lender
inclusion on the list Must provide comparative information Must include prominent statement advising
borrowers that use of school preferred lender not required
FFEL Preferred Lender Lists
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Prohibited Inducements Affects FFEL lenders and guaranty
agencies
Creates concept of “rebuttable presumption” for prohibited and allowed activities
Includes a non-exhaustive list of prohibited activities
Includes a list of allowed activities
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2007-2008 Regulations
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2007-08 TEACH Final Effective for the 2008-2009 award year Must be repaid as Direct Unsubsidized Loan
if student does not – Teach for at least four years within
eight years of ceasing enrollment in the TEACH Grant eligible program, as a - Highly Qualified Teacher At a Title I school In a specified subject area
“In for a dollar, in for four years.”
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2007-08 TEACH Final Up to $4,000 per year for first
undergraduate or post-baccalaureate (non degree) program - $16,000 aggregate
Up to $4,000 per year for graduate student - $8,000 aggregate
Prorated amounts for less than full-time enrollment
Award, when combined with other assistance, cannot exceed cost of attendance (No EFC)
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2007-08 TEACH Final TEACH Grant recipient must teach in a
high-need field in the majority of classes taught
“Other” high-need fields must be listed in the Department of Education’s Nationwide Listing of Teacher Shortage Areas at the time the recipient begins qualified teaching
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2007-08 TEACH Final Institutional Eligibility
See DCL GEN-08-07, posted to IFAP on June 3, 2008
Institutional Choice whether to participate An institution that offers one or more
TEACH Grant-eligible programs may participate in the TEACH Grant Program
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TEACH Grant Statistics
Number of Approved TEACH Grant Schools 611Number of Originating and Disbursing Schools 179Amount of Originations Number of TEACH Originations $12,992,725Number of TEACH Originations 3,754Actual Disbursement Amount $4,639,083Average TEACH Grant Award $3,462ATS Notes Received 5,821
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2007-2008 Loans Final
Definition of Not-for-Profit Holder FFEL Only
Income-based Repayment Plans FFEL and Direct Loans
Public Service Loan Forgiveness Direct Loan only
Economic Hardship and Military Service Deferments FFEL, Direct Loans, and Perkins
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A Rational Approach to Federal Student Aid
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Mandates
“ The entire financial aid system—including federal, state, institutional, and private programs—is confusing, complex, inefficient, duplicative, and frequently does not direct aid to students who truly need it.”
- The Secretary of Education’sCommission on the Future of Higher Education
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Mandates
Congress, in passing the HEOA, required the Department of Education to issue a report on efforts to simplify the FAFSA that includes looking at the elimination of income data elements, as well as other items.
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Preparing
Preparing
Preparing
Preparing
Choosing
Choosing
Choosing
Choosing
Applying
Applying
Applying
Applying
Funding
Funding
Funding
Funding
Attending
Attending
Attending
Attending
StudentStudentAwardAward
PackagePackage
SubsidizedSubsidizedSubsidizedSubsidized
Un-subsidizedUn-subsidizedUn-subsidizedUn-subsidized
PLUSPLUSPLUSPLUS
LoansLoans
FFELFFELFFELFFEL
PerkinsPerkinsPerkinsPerkinsDirectDirect
LoansLoans
DirectDirectLoansLoans
State andState andInstitutionalInstitutional
AidAid
PrivatePrivateLoansLoans
PrivatePrivateLoansLoans
SchoolsSchools
LendersLenders
GuarantyGuarantyAgenciesAgencies
SecondarySecondaryMarketsMarkets
GrantsGrants
FederalFederalWork StudyWork Study PellPell
GrantsGrants
PellPellGrantsGrants
LEAP/LEAP/ SLEAPSLEAP
LEAP/LEAP/ SLEAPSLEAP
FSEOGFSEOGFSEOGFSEOG
StudentStudent
U.S.U.S.Department ofDepartment of
EducationEducation
AdmissionAdmissionApplicationApplication
FAFSAFAFSA
Student EligibilityStudent Eligibility
Student Aid ReportStudent Aid Report
EmploymentEmploymentEmploymentEmployment
GrantsGrantsGrantsGrants
LoansLoansLoansLoans
ScholarshipsScholarshipsScholarshipsScholarships
MultipleMultipleAwardAward
PackagesPackages
SchoolsSchoolsStatesStates
PrivatePrivateFoundationsFoundations
Delivery Process/Student ViewDelivery Process/Student View – – FY2007FY200710 Million Recipients
14.5 MillionAid Applications
2,400
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6,000 $83 Billion Federal Aid
$1.2 Billion
$51.3 Billion $ 13 Billion$ 13 Billion $1.1 Billion$1.1 Billion
$976 Million$976 Million
$165 Million$165 Million
$14.4 Billion$14.4 Billion
ISIRISIR
ACG/SMARTACG/SMARTACG/SMARTACG/SMART
$580 Million$580 Million
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Issues – Federal Student Aid The application is complex and
intimidating. Much of the data are unverifiable. Current EFC formula is arbitrary,
difficult to understand, lacks clarity and relevance, and subject to “gaming.”
Result of application (EFC) is “how much the student will NOT receive.”
Multiplicity of programs is confusing.
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Principles for Reform Access to Aid
Application will request information that is easily obtainable and verifiable.
Application will only ask questions necessary to determine eligibility and award levels.
Federal Student Aid Targets the neediest students; Is independent of other aid; Is predictable; Is portable, and Distributes aid through fewer programs.
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Current ModelFamilyFamily Financial Resources (45
Questions!)Income (37 Questions) Assets (6 Questions)
+ Taxable Income (AGI) + Cash
+ Untaxed Income + Savings
+ Stocks, Bonds, Investments, etc.
- Home Equity, Retirement Accounts
Family size & Number in College (2)
Discretionary Uses Non-Discretionary Uses (Taxes, Living Expenses)
EFCEFC = Cost of AttendanceCost of Attendance
Pell GrantsPell Grants + Subsidized LoansSubsidized Loans
Unsubsidized LoansUnsubsidized Loans
LessWhat students and families have to pay
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Proposed ModelFamilyFamily Financial Resources (2 Questions!)
Cost of AttendanceCost of Attendance
Pell GrantsPell Grants + Subsidized LoansSubsidized Loans
Unsubsidized Loans/PLUSUnsubsidized Loans/PLUS
+ Adjusted Gross Income
+ Tax Exemptions
?
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A Simplified FAFSA
Only ask for information needed to determine federal aid eligibility, aid types, and amounts.Two pages - no instruction pages(s).Fewer than 30 questions –
- Identification - Dependency- Contact Information - Income / Exemptions- Eligibility - Certifications- Colleges and states to which information will be sent
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Simple FAFSA
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Rational Approach Establish–
Federal Student Aid Target (FSAT)
Federal Student Aid Commitment (FSAC)
Consolidate aid programs into one grant (Pell), one loan (DL/FFEL) and one work study (FWS) program.
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Federal Student Aid Target (FSAT)
Maximum amount of federal subsidized aid (Pell Grant, subsidized loans, and FWS).
Amount increases annually by CPI.
For example –-100% of average Tuition & Fees, Books & Supplies, and Meals & Housing at community colleges.
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Federal Student Aid Commitment (FSAC)
Student’s portion of FSAT based on AGI and IRS Number of Exemptions, related to HHS Poverty Levels.
Example: -- Grants up to 250% of poverty level; Sub loans and FWS up to 400% of poverty level;
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Unsubsidized Aid Includes unsubsidized Stafford and
PLUS loans;
Applies only after all other aid is awarded;
Covers difference between cost of attendance and all other sources of aid;
Includes annual loan limits for unsubsidized Stafford.
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Policy/Budget Considerations
Select “Dials” FSAT: percentage of cost of
attendance at which type of school FSAC: percentages of HHS poverty
level to be used for grant, subsidized loan, and work study
Determine “Levers” Maximum spending with current
allocations Optimized spending to ensure access
and success
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0
2,000
4,000
6,000
8,000
10,000
12,000
Pell Sub Loan
Pell Max = $4,800
Sub Loan Max = $5,500
Examples of Dials and Levers
0
2,000
4,000
6,000
8,000
10,000
12,000
Lowto $0
$3Kto
$6K
$9Kto
$12K
$15Kto
$18K
$21Kto
$25K
$29Kto
$32K
$36Kto
$40K
$44Kto
$48K
$51Kto
$55K
$58Kto
$62K
$68Kto
$71K
$73Kto
$80K
above$88K
Pell Sub Loan
Pell Max = $4,800
Sub Loan Max = $6,000
-
2
4
6
8
10
12
14
Lowto $0
$3 to$6
$9 to$12
$15to
$18
$21to
$25
$29to
$32
$36to
$40
$44to
$48
$51to
$55
$58to
$62
$68to
$71
$73to
$80
above$88
Income Level (in thousands of $)
Aid
(in
th
ou
san
ds
of
$)
Pell Grants
Subsidized Loans
0
2,000
4,000
6,000
8,000
10,000
12,000
Pell Sub Loan
Pell Max = $4,800
Sub Loan Max = $5,200
Unsubsidized Unsubsidized
Unsubsidized Unsubsidized
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1 2 2 3 4 5 6 7 8 More than 8
AGIMarried w/
Spouse Including Child
Income Cut-Off $21,000 $29,000 $36,000 $45,000 $55,000 $64,000 $73,000 $82,000 $92,000 $92,000
Low to $0 3,400 3,600 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 $1 to $3,000 3,400 3,400 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 $3,001 to $6,000 3,400 3,400 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 $6,001 to $9,000 3,400 3,400 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 $9,001 to $12,000 2,800 2,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 $12,001 to $15,000 1,950 2,400 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 $15,001 to $18,000 1,100 2,100 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 $18,001 to $21,000 400 1,500 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 $21,001 to $25,000 - 800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 $25,001 to $29,000 - 400 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 $29,001 to $32,000 - - 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 $32,000 to $36,000 - - 3,000 3,900 4,000 4,100 4,200 4,300 4,400 4,500 $36,001 to $40,000 - - - 2,600 3,100 3,200 3,300 3,400 3,500 3,600 $40,001 to $45,000 - - - 2,000 2,100 2,200 2,300 2,400 2,500 2,600 $45,001 to $48,000 - - - - 1,500 1,800 1,900 2,000 2,100 2,200 $48,001 to $51,000 - - - - 1,200 1,400 1,500 1,600 1,700 1,800 $51,001 to $55,000 - - - - 900 1,000 1,100 1,200 1,300 1,400 $55,000 to $58,000 - - - - - 800 900 1,000 1,100 1,200 $58,001 to $64,000 - - - - - 600 600 700 800 1,000 $64,001 to $68,000 - - - - - - 600 700 700 900 $68,001 to $71,000 - - - - - - 500 500 700 800 $71,001 to $73,000 - - - - - - 500 500 700 700 $73,001 to $82,000 - - - - - - - 400 600 600 $82,001 to $87,000 - - - - - - - - 500 500 $87,001 to $92,000 - - - - - - - - 400 400
"Single Persons, or Married w/ no
Children" "Families w/ a minimum of one Child"
Simple Look-Up Table(For Illustrative Purposes Only)
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What Does This Mean For Students?
A FAFSA that encourages access; Real-time feedback on probable
Federal Student Aid; Better awareness of state and
institutional value-added aid, and Predictability for persistence.
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