Transcript Changing Times of Alphabet Soup: Updates on the Acts and Regu

Changing Times of Alphabet
Soup:
Updates on the Acts and Regulations from
Washington, DC
Speakers:
Members of the MASFAA
Government Relations Committee
College Cost Reduction
and Access Act (CCRAA)
• Important News from Washington!
CCRAA…
Signed into law September 27, 2007
Budget reconciliation measure
Pell Grants
Secs. 101, 102(a) and 102(b)
• Eliminates tuition sensitivity effective
July 1, 2007 (see P-07-02)
• Increases the maximum authorized
amount:
 $4,800 for award years 2008-2009 and 20092010 (increase of $4900);
$5,000 for award years 2010-2011 and 20112012 (increases of $690);
$5,400 for the 2012-2013 award year
(increase of $1,090).
Teacher Education Assistance for
College and Higher Education
(TEACH) Grants
Sec. 104
• New grant program for current or
prospective teachers attending eligible
institutions, effective July 1, 2008
• Grants may be made up to $4,000 per
academic year
$16,000 maximum for undergraduate degree
or post-baccalaureate program
$8,000 maximum for master’s degree
TEACH Eligibility
• Minimum GPA of 3.25 on a zero to 4.0 scale; or
• Scored above the 75th percentile on at least one of the
undergraduate, post-baccalaureate, or graduate school
admission tests
AND
• (for bachelor’s degree or post-baccalaureate program)
completing or plans to complete coursework and other
requirements necessary to begin a career in teaching
• (for master’s degree) is a teacher or retiree from another
occupation with expertise in a field in which there is a
shortage of teachers, or is or was a teacher using highquality alternative certification routes
TEACH Recipient Obligations
• Applicant must serve as a full-time “highly
qualified” teacher for at least 4 academic years
within 8 years after completing education;
• Teach in a public or other qualified nonprofit
private elementary or secondary school; and
• Teach in a high-need field
OR ELSE…
• The TEACH Grant(s) are converted to
unsubsidized Direct Loan(s)
College Access Challenge Grant
Program
Sec. 801
• New 2-to-1 matching grant program for
States and qualifying philanthropic
organizations in each of the fiscal years
2008 and 2009
Challenge-supported activities include:
• Postsecondary education information and career
preparation for students and families
• Instruction and education on postsecondary education
financing options that promote financial literacy and
debt management
• Assistance in completing the FAFSA or other common
forms
• Need-based grant aid for students
• Professional development for guidance counselors at
middle and secondary schools, and financial aid
administrators and college admissions counselors at
institutions of higher education to help give student
better guidance on how to prepare for and navigate
through college
Need Analysis
Sec.104
• Sets specific increases in the student Income Protection
Allowance (IPA) for years 2009-2013
 Applies to dependent and independent students
 After 2012-2013, IPA is thereafter tied to the
Consumer Price Index
 Parent IPA is linked to the Consumer Price Index as
of 2009-2010
• Expands eligibility for the Simplified Needs Test and the
Automatic Zero EFC
• Eliminates consideration of certain untaxed income
Loan Deferment Changes
• Economic hardship Deferment
• Military deferment
Economic Hardship Deferment
Sec. 304(a)
• Changes from 100% of the poverty line for
a family of two to 150% of the poverty line
depending on borrower’s family size
• No debt burden criterion for the deferment
• Effective Date: October 1, 2007
Military Deferment
Secs. 202, 204
• Available to FFELP, Direct and Perkins
borrowers regardless of disbursement
date
• 3-year limit on military deferment removed
• Deferment extended 180 days following
demobilization
• Effective Date: October 1, 2007
Repayment Implications
• Public Service Loan Forgiveness
• Stafford Loan Interest rate Reduction
• Income-based repayment Plan
Public Service Loan Forgiveness
Secs. 203, 401
• Balance of interest and principal canceled after
10 years
 Not in Default
 Borrowers in public service during which they have
made 120 monthly payments in Direct Lending
(FFELP borrowers must consolidate into DL - any
payments made in FFELP would not count)
 Borrowers must still be in public service at the time of
loan cancellation
 Eligible under income-based, standard, or income
contingent repayment plans
Public Service?
• Public service jobs include:
 full-time jobs in public emergency management,
government, public safety, public law enforcement,
public health, public education, public early childhood
education, public child care, social work in a public
child or family service agency, public services for
individuals with disabilities, public services for the
elderly, public interest legal services (including
prosecution or public defense), public library services,
public school library sciences, other public schoolbased services or a tax exempt organization under
501(c)(3), or teaching as a full-time faculty member of
a Tribal College or University or other faculty teaching
in high-needs areas as determined by ED.
• Effective Date: payments made after October 1, 2007
Stafford Loan Interest rate
Reduction
Sec. 201(a)
• Phased-in rate reduction for undergraduate
subsidized Stafford Loans (FFELP and Direct)
from 6.8 % to 3.4% over 4 years
 6.0% on or after July 1, 2008 and before July 1, 2009
 5.6% on or after July 1, 2009 and before July 1, 2010
 4.5% on or after July 1, 2010 and before July 1,
20011
 3.4% on or after July 1, 2011 and before July 1, 2012
Income-Based Repayment Plan
“Partial Financial Hardship”
Sec. 203
• Borrower can request that payments do
not exceed…
15 percent of difference between borrower’s
AGI and 150 percent of the poverty line for
her/his family size, divided by 12
Parent PLUS borrowers are not eligible for
this plan, including borrowers with
consolidation loans that have underlying
parent PLUS loans
Income-based repayment Plan
“Partial Financial Hardship” cont.
• Other terms of the Plan:
 Borrower’s eligibility evaluated annually
 Education Department pays interest on
subsidized loans for the first 3 years
 Remaining balance of loan canceled after 25
years if the borrower made consistent
monthly payments under a regular or
reduced repayment plan or was in economic
hardship deferment
 Effective Date: July 1, 2009
Lender/Guarantor Impacts
Secs. 301, 302, 305, 306, 701
• Reductions in guaranty agency collection
retention and account maintenance fees
• Reductions in lender insurance percentage
and Special Allowance Payments
• Increase in lender origination fees
• Elimination of Exceptional Performer Status
• Creation of pilot program to auction FFEL
parent PLUS loans
Higher Education Act (HEA)
Reauthorization Update
• Senate HEA Amendments passed
July 24, 2007
• House bill may become available as early as
November 7
2006-2007
Negotiated Rulemaking Update
Final rules released during the week of October 29, 2007
Loan Provisions
• Prohibited inducements
• Preferred Lender Lists
• Other provisions
Resources
• House Committee on Education and Labor
• Information for Financial Aid Professionals
(IFAP)
• National Association of Student Financial Aid
Administrators (NASFAA)
• National Council of Higher Education Loan
Programs (NCHELP)
• Association of American Universities (AAU)
Questions?
Comments?