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?
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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?