Changing Times of Alphabet Soup: Updates on the Acts and Regu
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Transcript Changing Times of Alphabet Soup: Updates on the Acts and Regu
Federal Update:
Everything but HEOA
Presented by
Zack Goodwin – Harvard University
Financial Aid Compliance and Training Officer
Bernie Pekala – Boston College
Director of Student Financial Strategies
November 20, 2008
Agenda
• College Cost Reduction and Access Act
(CCRAA) of 2007
• Ensuring Continued Access To Student Loans
Act (ECASLA) of 2008
• Post-9/11 Veterans Educational Assistance Act
of 2008
College Cost Reduction
and Access Act (CCRAA)
• Signed into law September 27, 2007;
many provisions were effective October 1
• Budget reconciliation measure
Pell Grants
Secs. 101, 102(a) and 102(b)
• Eliminated tuition sensitivity as of July 1, 2007
• Increases the maximum authorized amount:
$4,800 for award years 2008-2009 and
2009-2010 (increase of $490 over 2007-2008)
$5,000 for award years 2010-2011 and 2011-2012
(increase 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
Final Rules Published June 23, 2008
• 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
battery of an undergraduate, post-baccalaureate, or
graduate school admission test
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
TEACH Recipient Obligations
• 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
• Teach in a high-need field
OR ELSE…the TEACH Grant(s) are converted
to unsubsidized Direct Loan(s) with interest
applied retroactively
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
• In Massachusetts, the State Departments of
Elementary/Secondary Education and Higher
Education will partner with the Massachusetts
Educational Financing Authority (MEFA) to
develop a ‘College and Career Web Portal’
The Massachusetts College and Career Web Portal
will offer students, parents and counselors:
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Practice exams and tutorials for standardized tests
Virtual campus tours
Assistance in completing the FAFSA
Grant and scholarship research tools
College application and letter of recommendation
tracking tools
• High school transcript electronic submission tool
Need Analysis
Sec.104
• Set 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
• Expanded eligibility for the Simplified Needs Test and
the Automatic Zero EFC
• Eliminated consideration of certain untaxed income
Economic Hardship Deferment
Sec. 304(a)
Final Rules Published October 23, 2008
• Changed from 100% of the poverty line for a
family of two to 150% of the poverty line
depending on borrower’s family size
• Debt burden criterion for the deferment was
eliminated (though maintained by the
Secretary through June 30, 2008)
Military Deferment
Secs. 202, 204
Final Rules Published October 23, 2008
• Available to FFELP, Direct Loan and Perkins
borrowers regardless of disbursement date
• 3-year limit on military deferment removed
• Deferment extended 180 days following
demobilization
Income-Based Repayment Plan
Sec.
203
Final Rules Published October 23, 2008
• Borrower can request that payments do not
exceed15% of difference between borrower’s
AGI and 150% 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
continued…
• 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
Public Service Loan Forgiveness
Secs. 203, 401
Final Rules Published October 23, 2008
• Balance of interest and principal forgiven after 120
payments, beginning October 1, 2007
• Amount forgiven will not be taxable
• Borrowers must:
Not be in default
Make their 120 monthly payments in Direct
Lending (FFEL borrowers must consolidate in DL)
Be working in public service at the time of each
payment and at loan cancellation
Repay their loans under the income-based, standard,
and/or income-contingent plans
What Is Public Service?
•
Employment by a nonprofit, tax-exempt 501(c)(3) organization
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Employment by the federal government, a state government, local
government, or tribal government (including the military and public
schools and colleges)
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Service in a full-time AmeriCorps or Peace Corps position
OR
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The Department of Education's regulations created a two-part test of
other circumstances under which students may still be eligible:
The employer is not "a business organized for profit, a labor union, a partisan political
organization, or an organization engaged in religious activities, unless the qualifying
activities are unrelated to religious instruction, worship services, or any form of
proselytizing"
AND
The employer provides any of the following public services: emergency management;
military service; public safety; law enforcement; public interest law services; early
childhood education; public service for individuals with disabilities and the elderly; public
health; public education; public library services; and school library or other school-based
services
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
Lender/Guarantor Impacts
Secs. 301, 302, 305, 306, 701
• Reduced guaranty agency collection
retention and account maintenance fees
• Reduced lender insurance percentage and
Special Allowance Payments
• Increased lender origination fees
• Eliminated Exceptional Performer Status
Lender/Guarantor Impacts
continued…
• Created PLUS Loan auction pilot program
Auction will determine what lenders will be eligible to
originate all parent PLUS Loans made to new borrowers as
of July 1, 2009
Two winners per state
The Secretary will plan and implement the auction
program in consultation with the FCC and Department of
the Treasury
UPDATE-See NASFAA News Release dated 11/13/08
Professional Judgment
• Dependency Overrides
May be based on decision of other school
Allows for emancipated minors
Allows for orphans, foster children and wards of
the court at any time from age 13 onward
• Adds dislocated worker and homeless statuses
to areas meriting professional judgment
Ensuring Continued Access to
Student Loans Act (ECASLA)
• Original legislation (2008-2009) signed
May 7, 2008
• One year extension (2009-2010) signed
October 7, 2008
Goals of ECASLA
• Ensure availability of FFEL and Direct
student loans for 2009-2010
• Uphold the public/private partnership
• Protect taxpayer interests (no net costs)
• Provide liquidity and support needed to
stabilize the student loan marketplace
Programs of ECASLA
• Purchase of Participation Interests (PPI)
• Loan Purchase (PUT)
• The Conduit (New-11/10/08)
Liquidity support to conforming Asset-Backed
Commercial Paper (ABCP) conduits
Post 9/11 Veterans Educational
Assistance Act of 2008
(New GI Bill)
• Became law on May 7, 2008
Details of the New GI Bill
• Entitlement (Section 3311): Two years of
active duty with some after 09/10/08
• Duration (Section 3312): 4 academic years
which equals 36 months
Details of the New GI Bill
continued…
• Payment (Section 3313):
Up to the most expensive in-state tuition
Monthly living/housing stipend
Annual $1,000 book/supplies stipend
All or some benefits to be paid directly
to school
• Tutorial Assistance (Section 3314):
$100/month up to a maximum $1,200
Details of the New GI Bill (cont.)
• Licensure Payment (Section 3315): Up to
$2,000 for one licensing/certification
• Tuition Assistance-Private (Section 3317): Up
to 50% of the cost greater than the most
expensive public program
• Transfer of Unused Benefits (Section 3319):
Allows transfer to spouse 6(+4) and/or child
(10) years of service
Resources
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www.ifap.ed.gov
thomas.loc.gov
edlabor.house.gov
help.senate.gov
www.nasfaa.org
www.aau.edu
www.gibill2008.org
www.ibrinfo.org
Questions?