federal update wvasfaa conference october 2011 annmarie weisman training officer 1

Federal UpdateFederal Update

WVASFAA ConferenceWVASFAA ConferenceOctober 2011 October 2011

Annmarie Weisman

Training Officer

1

Today’s Topics – Part 1Today’s Topics – Part 1

Budget Control Act of 2011

Verification

Cohort Default Rates

State Authorization

Retaking Coursework

Credit Hour

Ability-to-Benefit2

Today’s Topics – Part 2Today’s Topics – Part 2 Incentive Compensation

Return of Title IV Funds

Satisfactory Academic Progress

Disb. For Book and Supplies

Gainful Employment

Federal Loan Servicing

Textbook Disclosures and Net Price Calculator

3

DL Changes—DL Changes—Budget Control Act of 2011Budget Control Act of 2011

• DCL GEN-11-16 (8/31/2011): – Loss of Subsidized Loan Eligibility for

Graduate/Professional Students– For loan periods beginning on or after

7/1/2012, graduate/professional students are not eligible for Subsidized Loans

– $20,500 graduate/professional annual aggregate remains ($47,167 for certain health professions students), but will now all be Unsubsidized

4

DL Changes—DL Changes—Budget Control Act of 2011Budget Control Act of 2011

Where a 1st loan disb. date is on/after July 1, 2012, the up-front interest rebate for DL borrowers at the time of disb. will no longer be offered

Interest rate reductions to borrowers who agree

to have payments automatically

electronically debited from a bank account

remain

5

Termination of DL Repayment Incentives

Verification –Verification –Tax Transcript Tax Transcript RequirementRequirement

IRS Tax Transcript generally required for verification.

Schools may make exceptions.

Effective 2012-13.

(DCL: GEN-11-03)

Ordering an IRS Ordering an IRS Account Transcript—Three MethodsAccount Transcript—Three Methods

Things to Know about theThings to Know about theIRS Account TranscriptIRS Account Transcript

• Tax filers can expect to receive a paper IRS Tax Return Transcript within 5 -10 days of successful validation

– Guidance coming on how to interpret the transcripts

• IRS Tax Return Transcripts requested online cannot be sent to a 3rd party if processed by web or phone order

8

Verification Items 2012-13Verification Items 2012-13for all applicantsfor all applicants

# of HH members

# in college

Food Stamps (SNAP)

Child Support

Paid

9

Federal Register, 2011-07-13

Verification Items 2012-13Verification Items 2012-13for tax filers & for tax filers & non-filers*non-filers*

AGIU.S. income

tax paidUntaxed IRA Distributions

Untaxed Pensions

Education Credits

IRA Deductions

Tax Exempt Interest

*Income Earned from

Work

10

Federal Register, 2011-07-13

Verification and Verification and Professional JudgmentProfessional Judgment

• If applicant is selected for verification (by CPS or school):

– MUST verify before performing PJ

• If applicant NOT selected for verification:

– Verification NOT required

– May perform PJ as usual

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Mistaken belief that you must verify to do a PJ…

Cohort Default Rates (CDR)Cohort Default Rates (CDR)

• 9/12/2011: FY09 Official rates released

– Includes 2 YR rates

– Also includes the first 3 YR rates

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Presenter Name(s)

17.2

21.4

22.4

17.8

15

11.610.7

10.49.6

8.8

6.9

5.6 5.95.4 5.2

4.55.1 4.6 5.2

6.7 7.0

8.8

0

5

10

15

20

25

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Issue date

National Student Loan National Student Loan Cohort Default RatesCohort Default Rates

Per

cent

age

14

402

642

433

330

236

138

42

11 6 4 0 1 0 0 01 2 5

50

100

200

300

400

500

600

700

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Issued date

Schools Subject to Sanctions*Schools Subject to Sanctions*

*Numbers are pre-appeal and include only schools impacted by the three years of 25% or greater sanction. A school can be on extended sanction and is therefore reflected in multiple year counts.

Nu

mb

er o

f S

choo

ls

5Sanctions

5Sanctions


Previously, a school’s cohort default rate was:

The percentage of the number of the school’s FFEL and Direct Loan borrowers who enter repayment in a Federal Fiscal Year who default in that Federal Fiscal Year or by the end of the next Federal Fiscal Year

Starting with the 2009 cohort, is:

Borrowers who default in that Federal Fiscal Year or by the end of the next two Federal Fiscal Years

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Definition of DefaultDefinition of DefaultElectronic Announcement (EA) 2011-02-25

Summarizes Sections 435 (l) and (m) of HEA re: when a loan is in default.

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Cohort Default Rates (CDR)Cohort Default Rates (CDR)Change is Here!Change is Here!

• 2 YR Rates

• Disb Relief: 10%

• Sanctions: 25%

• 3 YR Rates (FY09+)

• Disb Relief: 15%

• Sanctions: 30% (after transition)

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Note: Alternate calculation for schools with <30 borrowers entering repayment in a fiscal year.

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2-Year Vs. 3-Year CDR2-Year Vs. 3-Year CDR

Numerator = the # of borrowers from the denominator who default within a cohort period

Denominator = the # of borrowers who enter repayment within a cohort period

3555000 = .071 or 7.1%

6055000 = .121 or 12.1%

5,000

FY-09 FY-10125 230

5,000

FY-09 FY-11FY-10

125 230 250


• Questions about CDR?– Contact: Operations Performance Division Hotline – Email: [email protected]– Phone: 202-377-4259

• Questions about Default Prevention?– Email: [email protected]– Phone: 202-377-

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mailto:[email protected]


Program Integrity—Program Integrity—Final Regulations PublishedFinal Regulations Published

• Federal Register 10/29/10- Program Integrity Issues –

School & Student• To improve the integrity of the Title IV

student assistance programs- Generally effective 07/01/11 (2011-2012)- Verification effective with 2012-2013

award year

High School DiplomaHigh School Diploma

• Institutions must develop and follow procedures to evaluate the validity of a student's HS diploma—

• if the institution or ED has reason to believe that the diploma is not valid

-or-• was not obtained from an entity that

provides secondary school education


• Effective with 2011-12 - New FAFSA question (#27) asks the HS name, city, and state– Paper FAFSA – for anyone with HS diploma– FOTW – for 1st year undergrads who

respond “yes” to HS diploma question

• FAFSA drop-down HS list populated by NCES– Includes most, but not all, U.S. schools– Not a list of “good” of approved schools


• No requirement to collect diploma from all students

• When needed, follow-up documentation may include a copy of:

• HS diploma

• Final HS transcript

• Information from companies that evaluate foreign diplomas

• etc.

– Student-certification not sufficient

– No appeal process in regulations

Ability To BenefitAbility To Benefit

• Regulations add new HEOA option for student to meet ATB requirement– Completing hours applicable to an eligible

degree or certificate offered by the institution• 6 semester, trimester, or quarter hours

OR 225 clock hours

Testing out does not satisfy completion of hours


• Not an “optional requirement” if school admits students without HS diploma as regular students – cannot fail to accept satisfactory

completion of 6 credit hours (or 225 clock hours) applicable toward an eligible program as a student’s ATB


• Pay for period after completion of hours

• No Title IV aid payment for 6 credits (225 clock hours), either prior to or retroactively

• In non-term, clock hour, and modular programs cannot pay back to beginning of payment period• Example – Clock hour school would establish

new academic year/payment period beginning with hour 226

Incentive CompensationIncentive Compensation

• A school may not provide a commission, bonus or other incentive payment based in any part, directly or indirectly on success in securing enrollments or financial aid to any person or entity engaged in any student recruiting or admission activities or in making decisions regarding awarding Title IV funds

• 12 Safe Harbors removed

Reference: HEA Section 487(a)(20)

Pay AdjustmentsPay Adjustments

• For an employee engaged in any student recruiting or admission activities or in making decisions regarding awarding financial aid -– An annual adjustment in a calendar year is

acceptable if school can document that the adjustment was not based upon enrollments or awarding financial aid (e.g. across the board pay raise)

Acceptable CompensationAcceptable Compensation

• Eligible schools, contractors and other entities may make profit-sharing payments to employees who would be prohibited from incentive compensation if provided to all employees

Clarification

State AuthorizationState Authorization

• State Authorization is part of institutional eligibility

• Regulations define what constitutes state authorization of an institution to operate and grant certificates or degrees

• Role of the state– Approving institutions– Monitoring institutions– Responding to complaints about institutions

from the public

State AuthorizationState Authorization

• Institutions must be licensed by the State to provide post-secondary educational programs– State charter, constitution, license, or other document – Federal Government approval – Indian Tribe – Religious institution exempt from state authorization

• The license must be subject to adverse action

• States must establish a process to review and act on complaints about an institution and enforce state laws

Credit HourCredit Hour• An institutionally established equivalency that

reasonably approximates not less than– One hour of classroom or direct faculty

instruction and a minimum of two hours out of class student work per week

or– Equivalent work for other academic activities as

established by the institution• e.g., labs, internships, practica, studio work

• Regulations created procedures that accrediting agencies must use to determine if an institution’s assignment of a credit hour is acceptable

Clock to Credit Hour Clock to Credit Hour ConversionConversion

• New regulations also modify provisions on when an institution must use clock or credit hours and standards for credit-to-clock-hour conversions– Undergraduate non-degree credit hour programs

must use clock-to-credit hour conversion unless each course in the program is fully acceptable to a degree program at the institution

– Institution must be also be able to demonstrate that students enroll in and graduate from that degree program

Clock to Credit Hour Clock to Credit Hour ConversionConversion

• For programs subject to the new clock to credit hour conversion, the conversion formula provided in regulation is:– One semester/trimester credit = at least 37.5

clock hours– One quarter credit = at least 25 clock hours

Clock to Credit Hour Clock to Credit Hour Conversion Conversion

• Regulations provide an exception for institutions that demonstrate that the credit hours meet new definition and there are no deficiencies identified by accreditor or State– In that case, previous minimums apply

– Semester/trimester credit hour to clock = 1:30

– Quarter credit hour to clock = 1:20

Retaking CourseworkRetaking Coursework

• Title IV funds may now pay for one retake of a previously passed course

• No change to number of retakes if not passed

• May count retake in definition of full time student

Satisfactory Satisfactory Academic ProgressAcademic Progress

• Consolidates SAP regulations into 34 CFR 668.34– Continued flexibility for institutions in

establishing SAP policies– Additional flexibility for institutions that monitor

SAP more often than the annual requirement– Definitions for “warning” and “probation” to

ensure standard usage

• In general, a student who is not making SAP is no longer eligible for Title IV aid

R2T4 Program DefinitionsR2T4 Program Definitions

• New rules define a program “offered in modules”– A course or courses in program do not span

entire length of payment period or period of enrollment

– Doesn’t matter what “modules” are called at the institution

Credit Hour Programs Credit Hour Programs Offered in ModulesOffered in Modules

• Standard term program “offered in modules”– Two 8-week sessions within a 16 week

semester– Three 5-week sessions within a 15 week

semester– Two 6-week sessions within a 12 week quarter– Winter “inter-session” or “J term” between fall

and spring semesters


• Student considered to be withdrawal if does not complete all days scheduled to complete within payment period/term

• School must document completed all courses with a passing grade

• If no passing grade in last scheduled course, school must demonstrate student completed period


• Student in modular program not considered a withdrawal if:– Provides written confirmation of intent to attend a

future module in period of enrollment at/before the time of withdrawal

– Student may change return date in writing prior to original return date

• Future module must begin within 45 calendar days in a non-standard and non-term program


• Nonstandard & Non-term Programs– Student considered to be withdrawal if not

scheduled to begin another course in period of enrollment >45 calendar days • 45 days measured from end of module

ceased attending

Clock Hour ProgramsClock Hour Programs

• Student considered to be withdrawal if does not complete all clock hours and weeks of instructional time that was scheduled to complete

• School must document completed all courses with a passing grade

• If no passing grade in last scheduled course, school must demonstrate student completed period

Is Student A Withdrawal?1. Did the student cease to attend before completing or fail to

begin attendance in a course scheduled to attend? If yes, go to question 2. If no, student not a withdrawal

2. When ceased to attend or failed to begin attendance in a scheduled course, was the student attending other courses? If yes, student not a withdrawal If no, go to question 3

3. Did the student confirm attendance in a later module in the payment/enrollment period (45 day rule, if applicable)? If no, student is a withdrawal. If not a withdrawal, Pell recalculation may apply

Return After WithdrawalReturn After Withdrawal

Student eligible for any Title IV funds for which eligible prior to withdrawal—

• Modular term-based credit hour program– Withdrawn student may return to same

program prior to end of payment period/ period of enrollment

• Clock hour/non-term credit hour program– Withdrawn student may return to same

program within 180 calendar days

R2T4 Calendar Days R2T4 Calendar Days Modular ProgramsModular Programs

• Total calendar days include all days on which the student was scheduled to attend

– Days of completed courses count if course does not span length of term

– Exclude scheduled breaks of 5+ consecutive days when student not scheduled to attend a module or other course during the period

• For a withdrawn student who has made schedule changes, do not count days of courses officially dropped prior to complete cessation of attendance

After Written Confirmation After Written Confirmation Of ReturnOf Return

• Student considered to be withdrawal if does not return as scheduled

• Withdrawal dates back to time that confirmation originally provided– Determine withdrawal date and days of

attendance as if confirmation of future attendance was never provided

R2T4 & Taking AttendanceR2T4 & Taking Attendance

• R2T4 calculates Title IV aid earned based upon student attendance– Aid prorated based upon days or hours

student attended

• Use the best info. available to determine withdrawal date– directly impacts dollars

$$

Required To Take AttendanceRequired To Take Attendance

• If required to take attendance—– For some students—use attendance

records for those students– For a limited period of time—use

attendance records for withdrawals during that limited period of time

– On a specific date—NOT considered to be required to take attendance

AttendanceAttendance

• Attendance must be “academic attendance” or “attendance at an academically-related activity”.

• Examples include– Physical class attendance where there is direct

interaction between instructor and student– Submission of an academic assignment– Examination, interactive tutorial, or computer-assisted

instruction– Study group assigned by school– Participation in on-line discussion about academic

matters– Initiation of contact with instructor to ask question

about academic subject

Disbursement for Disbursement for Books & SuppliesBooks & Supplies

• Institution must provide a way for Pell eligible students to purchase or obtain books and supplies no later than the 7th day of a payment period if:

- Funds could have been disbursed 10 days before beginning of payment period

AND

- Funds would have created a Title IV credit balance

• School provides student with lesser of presumed credit balance or amount needed by student as determined by the school

• The school may use one or more options to assist students in obtaining or purchasing books and supplies, which include:

• Cash, check, or EFT disbursements• bookstore vouchers• stored-value cards• school credit

• Disbursement of books and supplies policy for Pell eligible students must be provided to students in their consumer information


• If a student uses the way provided by the institution to get the books/supplies, the student is considered to have authorized the use of TIV funds and does not need a written authorization for this purpose only

• Institution must have a policy whereby a student may opt out of the way an institution provides for the purchase books and supplies


Gainful EmploymentGainful Employment• Notices of Proposed Rulemaking published

6/18/10 & 7/26/10

• Two sets of Final Rules published 10/29/10 effective 7/1/11– Program Integrity; Gainful Employment

Reporting and Disclosures– Gainful Employment – New Programs

• Final rules on Performance Metrics - 6/13/11

Gainful EmploymentGainful Employment

In the law, the gainful employment provisions apply to certain programs of study that are Title IV eligible because they lead to gainful employment in a recognized occupation

Gainful EmploymentGainful Employment

• All programs at for-profit schools except for: - A program leading to baccalaureate

degree in liberal arts offered since January 2009 at a for-profit school that has been regionally accredited since October 2007

• Any program at a public or not-for-profit school that is not:

- A program leading to degree- A transfer program of at least two years

Recognized OccupationRecognized Occupation

Recognized occupation is redefined as one identified by:

a Standard Occupational Classification (SOC) code

established by Office of Management and Budget

(OMB), or

an Occupational Network O*NET-SOC code

established by the Dept. of Labor

Gainful EmploymentGainful EmploymentAnnual SubmissionAnnual Submission

Institution must annually submit information on students enrolled in programs leading to gainful employment in a recognized occupation– Information on reporting will be provided

by ED

Gainful EmploymentGainful EmploymentAnnual SubmissionAnnual Submission

• Reporting deadlines:- By October 1, 2011 (ext. through Nov. 15, 2011)

–2006-2007 award year information if available–2007-2008, 2008-2009, 2009-2010 award

year information- 2010-2011 and beyond

–No earlier than September 30 but no later than the date established by the Secretary in a Federal Register

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ED has 5 standard DL servicers:

• Direct Loan Servicing Center (ACS)• FedLoan Servicing (PHEAA)• Great Lakes Educational Loan Services, Inc.• Nelnet• Sallie Mae

Federal Loan Servicers

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Federal Loan ServicersFederal Loan Servicers

• ED Servicers service DL & FFEL loans purchased by the ED under the authority in the Ensuring Continued Access to Student Loans Act (ECASLA) and through methods commonly referred to as a “PUT” loan.

• DL Servicing Center continues to service loans & ACS is transporting all active loans from Direct Loan Servicing System (DLSS) to the new Affiliated Computer Education Services (ACES) platform hosted by Nelnet

61

Federal Loan ServicingFederal Loan Servicing

• Not-For-Profits (NFPs) will provide services similar to the other Federal Loan Servicers, but with smaller portfolios

• If a NFP servicer reaches 2 million borrowers, that servicer must meet all Federal Loan Servicer requirements and will be treated as one.

• NFPs will receive transferred loans from the DLSS Direct Loan portfolio

62

Federal Loan ServicingFederal Loan Servicing

• NFPs (continued)

• No interface to receive DL Originations, Consolidations, Debt Management Collection System rehabilitated or TPD reinstated loans

• Phase-In Implementation Schedule:– MOHELA 10/11 (completed)– 2 Servicers 01/12– 3 Servicers 04/12– 3 Servicers 07/12– 4 Servicers 10/12– 3 Servicers 01/13– 3 Servicers 04/13– 3 Servicers 07/13

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64

Measuring Performance

64

Survey three groups Borrowers Schools FSA staff

65

Customer Satisfaction SurveysCustomer Satisfaction Surveys

Conducted quarterly

10 minutes or less

Textbook DisclosuresTextbook Disclosures

• Section 133 of HEA• Statutory -- ED has no

regulatory authority• Applies to all

institutions receiving Federal financial assistance

• Effective 7/1/2010• DCL GEN-10-09

published 6/8/2010

Textbook Information:Textbook Information:ISBN Info in Course SchedulesISBN Info in Course Schedules

• Institutions must disclose, on the institution’s Internet course schedule and in a manner of the institution’s choosing, the ISBN and retail price of required and recommended college textbooks and supplemental materials for each course

Textbook Information:Textbook Information:ISBN Info in Course Schedules (cont.)ISBN Info in Course Schedules (cont.)

• Exception #1:– If the ISBN number is not available for a college

textbook or supplemental material, then the institution must include in the Internet course schedule the:

• Author• Title• Publisher• Copyright date

Textbook Information:Textbook Information:ISBN Info in Course Schedules (cont.)ISBN Info in Course Schedules (cont.)

• Exception #2:– If the institution determines that the disclosure

of the info. is not practical for a textbook or supplemental material, the institution must indicate TBD instead of the info.

• Additionally, an institution must include a notice on its written course schedule that the textbook info. is available on the its Internet course schedule and the Internet address for the schedule

Textbook Information:Textbook Information:Info for College BookstoresInfo for College Bookstores

• Institution must give its bookstore the course schedule for the subsequent academic period– For each course for the next academic period:

• The ISBN and retail price (or alternatives discussed above) for each textbook/supplemental material required or recommended for the class

• The number of students enrolled• The maximum student enrollment

Textbook Information:Textbook Information:Information for StudentsInformation for Students

• Schools are encouraged to provide information to students about:– Programs for renting or

purchasing used textbooks– Guaranteed buy-back programs– Alternative content delivery

programs– Other cost-saving strategies

Net Price Calculator (NPC)Net Price Calculator (NPC)

• Undergraduate schools must post an NPC on its Web site that uses school data to provide estimated net price information to current and prospective students• Average yearly price actually charged to full-time, first-year

undergrads (COA – average need/non-need financial aid)

• Use ED’s or institution’s calculator

• Effective: October 29, 2011

• Involves: IT, Admissions, Registrar,

Financial Aid, Budget Office

72 72

Calculator template help line:

240-252-1707

Contact InformationContact Information

• If you have follow-up questions about this session, contact me at:– Annmarie Weisman, Training Officer– [email protected]– 215-656-6456

• To provide feedback to my supervisor:– Tom Threlkeld, Supervisor– [email protected]– 617-289-0144

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Your Region III Training TeamYour Region III Training Team

• Greg Martin, Training Officer– 215-656-6452– [email protected]

• Craig Rorie, Training Officer– 215-656-5916– [email protected]

• Annmarie Weisman, Training Officer– 215-656-6456– [email protected]

75

Thank

you!

federal update wvasfaa conference october 2011 annmarie weisman training officer 1

Documents

loan disb

schools cohort default

federal register

direct loan borrowers

federal fiscal year

tax filers nonfilers

changesbudget control

schools ffel