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National Association of Student Financial Aid Administrators NYSFAAA Federal Update May 13, 2011 © NASFAA 2011 Slide 1 Agenda • Context • Fiscal Year 2011 • Fiscal Year 2012 • Budget Resolution • Debt Ceiling • NASFAA Advocacy Budget Context FY 2012 Budget FY 2011 Budget Debt Ceiling Budget Characterization Budget Characterization Passing the Buck Media Circus Horse Trading Public Says… YouGov Poll – April 2011 http://today.yougov.com/news/2011/04/04/congress-and-spending/ FY 2011 Budget Is… DONE!!! FY2011 Budget, In Review • Last short-term continuing resolution (CR) expired April 14th – This was 4th CR, cumulative total of $12 billion in cuts • On February 19th House of Representatives passed H.R. 1, a 7month CR – Cut $100 billion from FY 2011 requested levels – Cuts maximum Pell Grant by $845 – Eliminates funding for FSEOG and LEAP • H.R 1 failed in the Senate and Senate’s alternative bill also failed FY2011 Budget, In Review How Does It Impact Student Aid? • Pell Cuts and/or Changes in Long-Term CR – Maximum $5,550 maintained—VICTORY – Elimination of Year-Round Pell – Crossover regulation lifted for summer 2011 • Other Changes – 0.2% percent cut across-the-board – SEOG cut by $20 million – Eliminate LEAP and Byrd Scholarships – Cut $25 million from TRIO; $20 million from GEAR UP – Cut $1.6 million from Javits Fellowships FY 2012 Budget Process • President Releases Budget Request - Done • Budget resolution process - In Process • Budget Conference Report • President submits detailed budget request to Congress • Appropriations Committees draft bills • Appropriations bills voted on and passed Pell Program Outlook • $20 billion shortfall for 2012-13 • If take no action now, maximum grant could have been reduced to $3,240 (a loss of $2,310) for 2012-13 • Budget reflects changes in existing Pell program and cuts to offset the expense of retaining a Pell maximum award of $5,550 The Pell Protection Act President Obama’s FY 2012 Request Elimination of 2nd Scheduled Awards • Effective 2011-12, occurred in FY 2011 CR • Higher costs than expected • No federal data on acceleration • Savings of $8 billion in 2011-12 and $60 billion over next 10 years Elimination of Subsidized Loans for Graduate Students • Effective 2012-13 • Graduate students only • Subsidies are not well-targeted • Subsidies don’t encourage enrollment • Savings of $2 billion in 2011-12 and $29 billion over next 10 years FAFSA and Verification, 2012-13 • Savings of $340 million in FY 2012 • Applicants who filed tax return before FAFSA will be directed to use IRS data retrieval – If use data retrieval, verification of that data is met – If do not use data retrieval, or subsequently change data: • Must explain why to school, and • May be required to verify with IRS-supplied documentation Simplify Loan Servicing for Split Loans • 6 million students have split loans • Would allow all federal student loan payments to be made to one federal loan servicer • Not the same as consolidation • Financial incentive to borrowers to participate • Savings of $2 billion in 2012-13 Restructure the Perkins Loan Program • Similar language as last year’s proposal • Lower cost alternative to private loans • Unsubsidized, 6.8% interest rate • Loan funds increase from $1 billion to $8.5 billion • Savings of $6.8 billion over 10 years Other Proposals • Eliminate LEAP • Extend American Opportunity Tax Credit • Funding at FY2010 levels for FWS, FSEOG, GEAR UP • Small funding increase for TRIO programs • Replace TEACH Grant program with Presidential Teaching Fellows program • $1.25 billion over 5 years to reward states and institutions that help more students earn degrees FY 2012 Budget Resolution • Released last month by Chairman Ryan (R-WI) • The Path to Prosperity: Restoring America’s Promise • Cuts $6.2 trillion in government spending, compared to President Obama’s FY 2012 request • Reduces deficit by $4.4 billion, compared to President Obama’s FY 2012 request • Repeal and defund HCERA FY 2012 House Budget Resolution For Pell, the assumptions are: - Lower the maximum award (apparently to pre-ARRA levels which we believe is FY 2008 levels – apx. $17 billion - Limit Pell grants to 6 years (12 semesters) - Eliminate College Cost Reduction and Access Act of 2007 [CCRAA] provisions, including auto-zero, IPA amounts. - Eliminate administrative fees paid to participating institutions. - Elimination of HCERA could include mandatory Pell savings and strengthened IBR provisions. Debt Ceiling • Debt Ceiling: Cap set by Congress on the amount of debt the federal government can legally borrow – Current is $14.294 trillion – Will likely reach this amount by May 16th, but Aug 2 extension • Congress will have to vote to raise debt ceiling – This is typical, done so 10x since 2001 – Likely tough fight on this ahead What’s Going On Right Now? • What does the Senate Say? • House 302 (a) Allocations? Advocacy • Build relationships with your lawmakers now by delivering information sheets on how their constituents—the students and families you serve—benefit from the student aid programs. • Follow the latest legislative developments by reading Today’s News, the NASFAA Advocate, and following us on the NASFAA Facebook page and the Save Student Aid Facebook page. • Share with NASFAA all your correspondence with lawmakers so we can support you and understand how to better work with your Congressional delegates. • Visit NASFAA’s “Take Action Page” to stay up-to-date on NASFAA’s latest calls to action. QUESTIONS? [email protected] OR [email protected]