HEA Reauthorization: Looking for Direction

2005 MASFAP Fall ConferenceThe Lodge of the Four SeasonsPresenter: Laurie Wolf

Des Moines Area Community College

Higher Education Act of 1965Higher Education Act of 1965

““An Act to strengthen the educational An Act to strengthen the educational resources of our colleges and universities resources of our colleges and universities

and to provide financial assistance for and to provide financial assistance for students in postsecondary and higher students in postsecondary and higher

education.”education.”

Lyndon B. JohnsonLyndon B. Johnson

January 4, 1965January 4, 1965

Time LineTime Line

2000 200520042003 2006

EnvironmentEnvironment

WarWar EconomyEconomy

Budget CutsBudget Cuts ‘‘No Child Left Behind’ ThemesNo Child Left Behind’ Themes

AccessibilityAccessibility

AffordabilityAffordability

AccountabilityAccountability

QualityQuality

Environment Environment (cont.)(cont.)

Supreme Court AppointmentsSupreme Court Appointments Hurricane KatrinaHurricane Katrina Hurricane RitaHurricane Rita Legislator ScandalsLegislator Scandals

Partisanship

Activity to DateActivity to Date

NASFAA recommendationsNASFAA recommendations HearingsHearings Testimony to CommitteesTestimony to Committees White PapersWhite Papers Introduction of BillsIntroduction of Bills HELP Committees Bills ApprovedHELP Committees Bills Approved

House Markup (H.R. 609) – July 22House Markup (H.R. 609) – July 22 Senate Markup (S. 1614) – September 8Senate Markup (S. 1614) – September 8

Three month extensionThree month extension

Normal Next StepsNormal Next Steps

Floor Consideration – HouseFloor Consideration – House Floor Consideration – SenateFloor Consideration – Senate Conference CommitteesConference Committees Review and Debate of Conference ReportReview and Debate of Conference Report Send to the President for ApprovalSend to the President for Approval Regulatory Process/Negotiated RulemakingRegulatory Process/Negotiated Rulemaking

What’s in the Bills?

Pell GrantPell Grant

HOUSEHOUSE Increase max awards to Increase max awards to

$6,000 for 2006-07$6,000 for 2006-07 Year-round GrantsYear-round Grants 18 semester eligibility18 semester eligibility Repeals Pell Grant Repeals Pell Grant

“tuition sensitivity” “tuition sensitivity” requirementrequirement

SENATESENATE Decreases max award to Decreases max award to

$5,100 for 2006-07; $5,100 for 2006-07; provides for a $300 per provides for a $300 per year increase for the year increase for the next four years.next four years.

Year-round GrantsYear-round Grants 18 semester limit18 semester limit

Current law: The authorized maximum award for 2003-04 was $5,800.

New Grant Program ProposalsNew Grant Program Proposals

HOUSEHOUSE Creates enhances Pell Creates enhances Pell

Grants PlusGrants Plus Achievement Grants for Achievement Grants for

State Scholars program that State Scholars program that would provide a $1,000 would provide a $1,000 bonus for Pell Grant eligible bonus for Pell Grant eligible students who participate in students who participate in the “State Scholars” the “State Scholars” program of study in high program of study in high school.school.

SENATESENATE Establishes Provisional Establishes Provisional

Grant Assistance Grant Assistance Program (ProGAP) Program (ProGAP)

Provides additional grants to Provides additional grants to Pell eligible students.Pell eligible students.

New Grant Program Proposals (cont.)New Grant Program Proposals (cont.)

HOUSEHOUSE Math & Science Honors Math & Science Honors

ScholarshipsScholarships

Competitive awards to Competitive awards to students pursuing BA, students pursuing BA, MA, PhD in science and MA, PhD in science and engineering.engineering.

Loan forgiveness Loan forgiveness

SENATESENATE National SMART GrantsNational SMART Grants

Provide up to $1,500 per Provide up to $1,500 per year to Pell eligible students year to Pell eligible students in their third or fourth year in their third or fourth year of study, who are majoring of study, who are majoring in math, science, in math, science, engineering, or a foreign engineering, or a foreign language critical to national language critical to national security.security.

Campus Based Aid ProgramsCampus Based Aid Programs

HOUSEHOUSE FormulaFormula Phases out base guarantees Phases out base guarantees

and creates “fair share” and creates “fair share” allocation process over 10 allocation process over 10 yearsyears

SEOGSEOG Authorizes $799M for Authorizes $799M for

FY2006, and such funds as FY2006, and such funds as may be necessary for may be necessary for succeeding five yearssucceeding five years

SENATESENATE FormulaFormula Maintains current allocation Maintains current allocation

formulaformula

SEOGSEOG Authorizes such funds as Authorizes such funds as

may be necessary for FY06 may be necessary for FY06 and succeeding five fiscal and succeeding five fiscal yearsyears

Campus Based Aid Programs (cont.)Campus Based Aid Programs (cont.)

HOUSEHOUSE Work-StudyWork-Study Authorizes $1B for FY2006, and Authorizes $1B for FY2006, and

such funds as may be necessary such funds as may be necessary for succeeding five yearsfor succeeding five years

Perkins LoanPerkins Loan Authorizes $250M for FY2006, Authorizes $250M for FY2006,

and such funds as may be and such funds as may be necessary for succeeding five necessary for succeeding five yearsyears

SENATESENATE Work-StudyWork-Study Provides waiver for 7% Provides waiver for 7%

community service requirementcommunity service requirement

Authorizes such funds as may be Authorizes such funds as may be necessary for FY06 and necessary for FY06 and succeeding five fiscal yearssucceeding five fiscal years

Perkins LoanPerkins Loan Authorizes such funds as may be Authorizes such funds as may be

necessary for FY06 and necessary for FY06 and succeeding five fiscal yearssucceeding five fiscal years

Perkins Loan ProgramPerkins Loan Program

HOUSEHOUSE Increase annual limits:Increase annual limits:

Undergraduates: $5,000Undergraduates: $5,000 Graduates: $8,000Graduates: $8,000 Increases aggregate Increases aggregate

limit:limit: Undergraduate: $27,500Undergraduate: $27,500 Graduate: $60,000Graduate: $60,000

SENATESENATE Maintains current lawMaintains current law

Stafford Loan ProgramStafford Loan Program

HOUSEHOUSE

Borrowing LimitsBorrowing Limits Increases undergraduate Increases undergraduate

annual limits:annual limits: 11stst year: $3,500 year: $3,500 22ndnd year: $4,500 year: $4,500

Increases unsubsidized Increases unsubsidized annual limits for annual limits for graduates: $12,000graduates: $12,000

SENATESENATE

Borrowing LimitsBorrowing Limits Increases undergraduate Increases undergraduate

annual limits:annual limits: 11stst year: $3,500 year: $3,500 22ndnd year: $4,500 year: $4,500

Increases unsubsidized Increases unsubsidized annual limits for annual limits for graduates: $12,000graduates: $12,000

No expansion to aggregate borrowing limits.

Origination FeesOrigination Fees

HOUSEHOUSE Phases down borrower Phases down borrower

paid fees in Direct to paid fees in Direct to 1%, but raises fee to 3% 1%, but raises fee to 3% in 2006 prior to phase in 2006 prior to phase downdown

Phases out 3% fee in Phases out 3% fee in FFEL by 2010FFEL by 2010

Requires collection of Requires collection of 1% FFEL guarantee fee1% FFEL guarantee fee

SENATESENATE Permits Secretary to set Permits Secretary to set

Direct fee from 1-3%Direct fee from 1-3% Maintains current FFEL Maintains current FFEL

3% fee3% fee Lenders retain ability to Lenders retain ability to

pay fee for borrowerspay fee for borrowers Requires collection of Requires collection of

1% FFEL guarantee fee 1% FFEL guarantee fee

Interest RatesInterest Rates

HOUSEHOUSE Eliminates provision in Eliminates provision in

current law that changes current law that changes variable to fixed 6.8% variable to fixed 6.8% after July 1, 2006after July 1, 2006

Retains current variable Retains current variable rate capped at 8.25%rate capped at 8.25%

SENATESENATE Retains provision in Retains provision in

current law that will current law that will convert the interest rate convert the interest rate on Stafford and on Stafford and Consolidation loans to a Consolidation loans to a fixed 6.8% after July 1, fixed 6.8% after July 1, 2006 2006

Consolidated LoansConsolidated Loans

HOUSEHOUSE Allows borrowers to choose Allows borrowers to choose

either fixed or variable rateseither fixed or variable rates Rate capped at 8.25%Rate capped at 8.25% Permits ‘reconsolidation’ or Permits ‘reconsolidation’ or

refinancing for borrowers refinancing for borrowers seeking income-contingent seeking income-contingent repayment or who are repayment or who are consolidating a defaulted consolidating a defaulted loanloan

SENATESENATE Retains current fixed Retains current fixed

interest rate, but increases interest rate, but increases the origination fee paid to the origination fee paid to 1%1%

No provision for No provision for ‘reconsolidation’ or ‘reconsolidation’ or refinancingrefinancing

Loan DisbursementsLoan Disbursements

HOUSEHOUSE Reinstates expired Reinstates expired

provisions with low provisions with low student loan default student loan default rates to allow them to rates to allow them to waive the 30-day waive the 30-day disbursement delay and disbursement delay and to disburse loan to disburse loan proceeds in one proceeds in one disbursement to new disbursement to new students.students.

SENATESENATE Reinstates expired Reinstates expired

provisions with low provisions with low student loan default student loan default rates to allow them to rates to allow them to waive the 30-day waive the 30-day disbursement delay and disbursement delay and to disburse loan to disburse loan proceeds in one proceeds in one disbursement to new disbursement to new students.students.

Single Holder RuleSingle Holder Rule

HOUSEHOUSE Repeals single holder Repeals single holder

rule but requires rule but requires borrower to consult with borrower to consult with current loan holder current loan holder when consolidatingwhen consolidating

SENATESENATE Repeals single holder Repeals single holder

rulerule

Loan Repayment and ForgivenessLoan Repayment and Forgiveness

HOUSEHOUSE Creates a new 2-year Creates a new 2-year

forbearance forbearance Repeals ‘3-times rule”Repeals ‘3-times rule” Loan forgiveness for Loan forgiveness for

teachersteachers Creates loan forgiveness Creates loan forgiveness

for: nurses, early child- for: nurses, early child- hood educators, math & hood educators, math & science teachersscience teachers

SENATESENATE Creates new loan Creates new loan

forgiveness condition in forgiveness condition in Direct Loan program for Direct Loan program for public sector employeespublic sector employees

School As LenderSchool As Lender

HOUSEHOUSE Clarifies only applies to Clarifies only applies to

Stafford loans for Stafford loans for graduate and graduate and professional studentsprofessional students

Requires use of all Requires use of all institutional revenue to institutional revenue to be used for need-based be used for need-based aidaid

SENATESENATE Imposes a moratorium Imposes a moratorium

on new schools; allows on new schools; allows current schools to current schools to continuecontinue

Requires use of all Requires use of all institutional revenue to institutional revenue to be used for need-based be used for need-based grantgrant aid aid

Experimental SitesExperimental Sites

HOUSEHOUSE Maintains experimental Maintains experimental

sites for the sites for the administration of administration of federal student loans at federal student loans at institutions with institutions with successful programssuccessful programs

SENATESENATE Permits, but does not Permits, but does not

require, the Secretary require, the Secretary the authority to continue the authority to continue successful experimental successful experimental sites at participating sites at participating institutionsinstitutions

Needs AnalysisNeeds Analysis

HOUSEHOUSE Expands ‘auto zero’ to Expands ‘auto zero’ to

families or students who families or students who receive benefits under receive benefits under certain mean-tested federal certain mean-tested federal benefit programsbenefit programs

Creates new ‘EZ FAFSA’Creates new ‘EZ FAFSA’ Increases income protection Increases income protection

allowance to $3,000 for allowance to $3,000 for employed dependent employed dependent studentsstudents

SENATESENATE Expands ‘auto zero’ to Expands ‘auto zero’ to

families or students with families or students with adjusted gross income less adjusted gross income less than $20,000than $20,000

Creates new ‘EZ FAFSA’Creates new ‘EZ FAFSA’ Increases income protection Increases income protection

allowance to $3,000 for allowance to $3,000 for employed dependent employed dependent studentsstudents

AccreditationAccreditation

HOUSEHOUSE Permits states to accredit Permits states to accredit

institutionsinstitutions Establishes new Establishes new

accreditation review accreditation review standardstandard

Requires public disclosures Requires public disclosures of agency actionsof agency actions

Expands the due process Expands the due process provisions in current lawprovisions in current law

SENATESENATE No provision on states No provision on states

accrediting institutionsaccrediting institutions No provision on board of No provision on board of

governancegovernance Requires public disclosures Requires public disclosures

of agency actionsof agency actions Expands the due process Expands the due process

provisions in current lawprovisions in current law

Transfer of CreditTransfer of Credit

HOUSEHOUSE Requires institutions to have Requires institutions to have

a transfer of credit policy a transfer of credit policy and to make it publicly and to make it publicly availableavailable Must include a statement that Must include a statement that

the transfer of credit is not the transfer of credit is not solely denied on the basis of solely denied on the basis of the accrediting agency of the the accrediting agency of the sending institution sending institution

SENATESENATE Requires institutions to make Requires institutions to make

public their transfer of credit public their transfer of credit policiespolicies Which must include (1) a Which must include (1) a

statement that the transfer of statement that the transfer of credit is not solely denied based credit is not solely denied based on the accrediting agency of the on the accrediting agency of the sending institution, and (2) a sending institution, and (2) a list of institutions with which list of institutions with which the institution has a transfer the institution has a transfer articulation agreementarticulation agreement

50% Rules on Distance Education50% Rules on Distance Education

HOUSEHOUSE Repeals the 50% ruleRepeals the 50% rule

SENATESENATE Maintains the 50% ruleMaintains the 50% rule

Definition of InstitutionDefinition of Institution

HOUSEHOUSE Creates a single Creates a single

definition.definition.

SENATESENATE Maintains current lawMaintains current law

Two definitions of Two definitions of institutions for nonprofit institutions for nonprofit and proprietaryand proprietary

Student Information Reporting Student Information Reporting RequirementsRequirements

HOUSEHOUSE No similar provisionsNo similar provisions

SENATESENATE Requires institutions to Requires institutions to

report on ‘student body report on ‘student body diversity’, including diversity’, including information on the information on the percentage of enrolled, full-percentage of enrolled, full-time students who are (1) time students who are (1) male, (2) female, (3) form a male, (2) female, (3) form a low-income background, low-income background, and a self-identified and a self-identified member of a major racial or member of a major racial or ethnic groupethnic group

Alumni Reporting RequirementsAlumni Reporting Requirements

HOUSEHOUSE No similarNo similar

SENATESENATE Requires institutions to Requires institutions to

report to the Department report to the Department information on information on employment placement employment placement of graduates and of graduates and graduates that enroll in graduates that enroll in graduate educationgraduate education

College CostsCollege Costs

HOUSEHOUSE Requires collection of Requires collection of

additional information additional information by the Departmentby the Department

Creates a College Creates a College Affordability IndexAffordability Index

Provisions for Provisions for institutions who fail to institutions who fail to complycomply

SENATESENATE Requires the Requires the

Department to collect Department to collect and provide public and provide public information about costs information about costs of attendanceof attendance

Drug OffensesDrug Offenses

HOUSEHOUSE Clarifies current lawClarifies current law

Applies only to enrolled Applies only to enrolled students who are students who are receiving Title IV Aid receiving Title IV Aid and are convictedand are convicted

SENATESENATE Clarifies current lawClarifies current law

Applies only to enrolled Applies only to enrolled students who are students who are receiving Title IV Aid receiving Title IV Aid and are convictedand are convicted

Non-Student Aid ProvisionsNon-Student Aid Provisions

HOUSEHOUSE The sense of the The sense of the

Congress – universities Congress – universities ‘should facilitate the free ‘should facilitate the free and open exchange of and open exchange of ideas’ and that students ideas’ and that students should not be should not be ‘discriminated against’ ‘discriminated against’ and should be ‘treated and should be ‘treated equally and fairly’equally and fairly’

SENATESENATE No similar provisionNo similar provision

What’s NotWhat’s Not

STAR ProposalSTAR Proposal Switching use of tax tables to an Income Switching use of tax tables to an Income

Protection Allowance (IPS) calculation to Protection Allowance (IPS) calculation to assess family contributionassess family contribution

Limited Return of Title IV changesLimited Return of Title IV changes

Legislation is in state of flux – changes taking Legislation is in state of flux – changes taking place behind the scenes.place behind the scenes.

What Should the Aid Community What Should the Aid Community Be Doing?Be Doing?

Track BillsTrack Bills Be aware of SAVINGS RAIDINGS!!!!!Be aware of SAVINGS RAIDINGS!!!!!

Research effects of proposed changes to your Research effects of proposed changes to your campus and studentscampus and students

Get acquainted with members of your Get acquainted with members of your Congressional DelegationCongressional Delegation

Watch for call for action from NASFAA, Watch for call for action from NASFAA, MASFAA and State Federal Issues contactsMASFAA and State Federal Issues contacts

Restore the Intent of HEARestore the Intent of HEA

““An Act to strengthen the educational resources An Act to strengthen the educational resources of our colleges and universities and to provide of our colleges and universities and to provide

financial assistance for students in financial assistance for students in postsecondary and higher education.”postsecondary and higher education.”

Lyndon B. JohnsonLyndon B. Johnson

January 4, 1965January 4, 1965