Transcript U.S. Department of Education Federal Update Dan Klock

U.S. Department of
Education
Federal Update
Dan Klock
Federal Student Aid
1
Today’s Topics
 Appropriations and Budget
 Legislative Update
 Cohort Default Rates
 Direct Loan Transition
 IRS Data Retrieval
 Two Pells In One Award Year
 Regulatory Update
 Other
2
Appropriations and
Program Budget
3
Title IV Appropriations
Program
Pell Grant
(Max Award)
FSEOG
FWS
Perkins
LEAP
ACG/SMART
FY 2009*
FY 2010
FY 2011**
(AY 09-10)
(AY 10-11)
(AY 11-12)
$36,492,000,000 $26,988,100,000 $34,878,000,000
$5,350
$ 757,500,000 $ 757,500,000 $
$ 1,180,500,000 $ 980,500,000 $
$ 67,200,000
―
$ 63,852,000 $ 63,852,000
$ 73,000,000 $ 1,336,000,000
* Includes Recovery Act funding
** President's FY 2011 Budget Request
4
$5,550
$5,710
757,500,000
980,500,000
―
―
Title IV Aid Available
Program
Pell Grant
(Max Award)
FSEOG
FWS
Perkins
LEAP
ACG/SMART
TEACH
Loans
TOTAL
5
$
FY 2010
FY 2011*
(AY 10-11)
(AY 11-12)
32,295,200,000
$
$5,550
34,834,300,000
$5,710
$
958,800,000
$
1,170,800,000
$
1,041,500,000
$
161,555,000
$
932,000,000
$
79,800,000
$ 108,762,900,000
$
$
$
958,800,000
1,170,800,000
1,000,000,000
―
―
$
93,200,000
$ 116,393,200,000
$145,402,555,000
$154,450,300,000
Legislative Update
6
Legislative Update
7
FFEL/Direct Loan
Cohort Default Rates
8
National Student Loan Default Rates
9
Pennsylvania Default Rates
(FY 2006 - FY 2008)
Rate
Borrowers in
Repayment
Borrowers in
Default
10
2006
X.X%
2007
X.X%
2008
X.X%
86,788
96,517
3,212
4,056
HEOA Changes
• Increases CDR monitoring period from
two to three years
• Increases disbursement relief threshold
from 10 percent to 15 percent
• Increases sanction threshold default rate
from 25 percent to 30 percent
• Establishes transition period to
implement sanctions
11
What is the CDR Calculation?
Currently, a school’s cohort default rate is:
The percentage of the number of the school’s FFEL
and Direct Loan borrowers who enter repayment in
one Federal Fiscal Year who default in that Federal
Fiscal Year or by the end of the next Federal Fiscal
Year.
Beginning with the 2009 cohort will be:
Borrowers who default in that Federal Fiscal Year or
by the end of the next two Federal Fiscal Years.
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2-Year Versus 3-Year Calculation
The Numerator is the
number of borrowers from
the denominator who
default within a cohort
period
FY-09
125
5,000
FY-10
230
FY-09
125
FY-10
230
5,000
13
The Denominator is the
number of borrowers who
enter repayment within a
cohort period
355
5000
7.1%
FY-11
250
605
5000
.071 or
.121 or 12.1%
Transition Period
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Direct Loan Transition
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Direct Loan Transition
• Legislation: Health Care and Education
Reconciliation Act of 2010
• 100% Direct Loans July 1, 2010 and
forward
• Earliest disbursement date drives
remaining FFELP activity
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Direct Loan Transition
•
•
•
•
•
•
Some things are the same
Virtually ALL Title IV regulations
Origination/Certification
Loan types/Interest Rates*/Repayment**
Counseling
Promissory Note
*FFELP PLUS 8.5%...DL PLUS 7.9
**Income Contingent unique to DL
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Direct Loan Transition
• Some things are different
• Loan benefits unique to DL
• Actual disbursement
– Origination fee/rebate
• Funding/Cash
• Additional locations to a main campus
• Reconciliation
– Program requirement
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Legislation
• Higher Education Opportunity Act of 2008
Pub. L. 110-315 (effective 2009-2010)
• More grant aid to needy students
• Eligibility for a second Scheduled Award in
an award year to accelerate completion
19
Direct Loan Transition
• Contracted with 4 additional servicers
–
–
–
–
–
ACS (current servicer)
Nelnet
Sallie Mae
Great Lakes Education Loan Services
AES/PHEAA
• Will “service” borrowers only…no origination
responsibility
20
Direct Loan Transition
Can a school select the servicer with whom
they wish to work?
• No. Loans will be disbursed to all servicers
systemically as they book
How will a school know which servicer has
a particular loan?
• By looking at the loan in NSLDS
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IRS Data Retrieval
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IRS-FSA Concept
 Federal Student Aid (FSA) and the Internal
Revenue Service (IRS) developed a non-consent
solution to simplify FAFSA completion.
 Tax filer retrieves own data
 No Consent
 Voluntary
 Will allow some applicants to retrieve their income
tax data from the IRS.
 IRS data can be automatically transferred to
FOTW.
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Option to Access IRS Information
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Get My Federal Income Tax Information
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Federal Income Tax Information Provided
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ISIR Codes and Flags
 CPS will set flags and comment codes to
indicate that student and/or parent
transferred IRS data into FOTW
 Comment codes will appear in –
 FAA Information section of the ISIR
 Student Inquiry section of FAA Access
 Flags and codes set based on certain
conditions.
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IRS Request Flag Values
Student & Parent IRS
Request Flag
Description
IRS data request for the student/parent was not submitted to IRS (default value)
00
01
IRS data request for the student/parent was sent to IRS
IRS data for the student/parent was returned from the IRS and was not changed by the user
02
IRS data for the student/parent was returned from IRS and was changed by the user
03
04
05 (Under
Construction)
06 (Under
Construction)
IRS data for the student/parent was transferred from the IRS and on a correction entry at least
one IRS data field was changed by the user
IRS data for the student/parent was transferred from the IRS but may be incomplete based on
marital status and tax filing status
IRS data for the student/parent was transferred from the IRS but marital status conflicts with tax
filing status
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Implementation Schedule
 2009-10 IRS process began in January 2010.
 Pilot to test proof of concept.
 2010-11 IRS data share will begin in September
of 2010.
 2011-12 IRS data share expected to begin with
start-up in January 2011.
 Within a couple of weeks electronic tax filing.
 Within several weeks of paper tax filing.
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Enhancements
• Add data retrieval
process to Corrections
on the Web
• Add Spanish language
version or enable
Spanish FOTW filers to
use retrieval process
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Two Pells in an Award Year
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Legislation
• Higher Education Opportunity Act of 2008
Pub. L. 110-315 (effective 2009-2010)
• More grant aid to needy students
• Eligibility for a second Scheduled Award in
an award year to accelerate completion
33
Negotiated Rulemaking
• Team V-General and Nonloan
Programmatic Issues in 2009
• Notice of proposed rulemaking: August
21, 2009
• Final regulations: October 29, 2009
• Effective date: starting with the 20102011 Award Year
• Dear Colleague Letter
34
Pell Constants
Unchanged by Two Pells
• Scheduled Award:
– Is the amount that a full-time student would
receive for a full academic year based on the
student’s EFC and COA.
– Prorated by payment period based on hours
and weeks of instructional time attended.
• Payment periods
• Payment for a payment period calculations
35
Pell Constants
Changed by Two Pells and no longer true
• Student may receive only one Scheduled
Award in an award year.
• Student is always eligible for payment as
less-than-half-time student.
• Institution may assign a crossover payment
period to either award year as a general
policy or on a case-by-case basis.
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Eligible Student
• Is enrolled at least as a half-time student
• Is enrolled in an eligible program leading to a
bachelor’s or associate degree or other
recognized educational credential.
– An exception to the degree or certificate is
provided for students with intellectual disabilities.
• The program must be greater than one
academic year in length—in both hours and
weeks of instructional time.
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Eligible Student
• Is enrolled in credit or clock hours
attributable to the student’s second
academic year in the award year
– Has successfully earned sufficient hours
in the award year that some hours in
payment period are attributable to the
second academic year in that award year
– Is a major change from proposed
regulations
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Crossover Payment Period
• Must assign the payment period to the award
year in which the student receives the greater
payment.
• Must make assignment to the award year
with the greater payment regardless of
whether the payment for the first award year
would be from the first or second Scheduled
Award of that award year.
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If Law Had Not Changed - Semester Example
Student may only receive up to ONE Scheduled Award within an
Award Year. Assume student’s 2009-2010 Scheduled Award is
$5,350 and will be $5,550 for 2010-2011.
Fall 2009
$2,675
Spring 2010 Summer 2010
$2,675
$0
100%
2009-10 AY
2009-10 Award Year
Summer 2010
$2,775
Fall 2010
$2,775
2010-11 Award Year
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Spring 2011
$0
100%
2010-11 AY
New Law - Semester Example
Student may receive up to TWO Scheduled Awards within an
Award Year. Assume student’s 2009-2010 Scheduled Award is
$5,350 and will be $5,550 for 2010-2011.
Fall 2009
$2,675
Spring 2010
$2,675
Summer 2010
$2,675
150%
2009-10 AY
2009-10 Award Year
Fall 2010
$2,775
Spring 2011
$2,775
Summer 2011
$2,775
2010-11 Award Year
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150%
2010-11 AY
New Law - Semester Example
Student may receive up to TWO Scheduled Awards.
Student’s Scheduled Award is $5,350 for the Award Year.
Summer 2009
$2,675
Fall 2009
$2,675
Spring 2010
$2,675
Summer 2010
$2,675
2009-10 Award Year
200%
2009-10 AY
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Other Information
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Awards for Children of Deceased Military
Service Members
Military
For any student whose parent or guardian was a member
of the U.S. Armed Forces and died as a result of military
service in Iraq or Afghanistan after September 11, 2001.
 If undergrad and Pell eligible EFC, all Title IV aid
awarded using zero EFC.
 If not Pell eligible EFC, undergraduate student gets an
“Iraq/Afghanistan Service Grant” award the amount of
maximum Pell for enrollment status.
 All other Title IV aid awarded using calculated EFC.
44
Department of Defense Match
• In May 2010, began matching applicant records in CPS
against DoD file
– 2009-10 applicants –
• Calls and e-mails to FAA’s
• Letters to students
– 2010-11 applicants –
• New DoD Flag set on ISIRs
• Letters to students
• To ensure all eligible students are awarded aid
appropriately, FAA’s must pay attention to new ISIR flag
• DCLs posted on IFAP provide operational guidance
45
Parent PLUS and FAFSA
 Beginning 2011-2012 student must file
FAFSA for Parent PLUS Loan
 98 percent already file
 COD will monitor
 Need to perform database matches to
verify that student is eligible
 Social Security Number
 Citizenship Status
 Selective Service
 NSLDS for defaults and overpayments
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Professional Judgment
Authority and guidance
•
•
•
•
47
Spelled out in Sec. 479A of HEA
No regulations
Department is prohibited from regulating
DCLs offer clarification on specific issues
Professional Judgment
Recent special guidance
• Dear Colleague Letter GEN-09-04;
issued April 2, 2009
– Encourages FAAs to consider special
circumstances during these challenging economic
times
• Dear Colleague Letter GEN-09-05;
issued May 8, 2009
– Letters to all recipients of unemployment insurance
benefits that can be used as documentation
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Experimental Sites Initiative




Federal Register Notice
Changed Approach
Solicited ideas for possible experiments
Must be real experiments
 Control and experimental groups
 Rigorous evaluation and reporting
 Possibility to impact change to law, rules, etc.
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Experimental Sites Initiative
 Received100 suggestions for possible
experiments
 Some duplicates or close enough
 Some schools can do under current
rules
 Some “out of bounds”
 Staff Reviewed about 35
 Staff will recommend six to ten
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Experimental Sites Initiative
 Second Federal Register Notice
 Will describe “approved” experiments
 Will ask schools to volunteer
 ED will determine which schools are
approved
 PPAs will be revised
 Experiments begin at appropriate time
which will likely be different for each
experiment.
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Regulatory Update
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Program Integrity NPRM-1
 Notice of Proposed Rulemaking issued June 18,
2010 to improve the integrity of the Title IV
student assistance programs.
 Negotiations held between November 2,
2009 and January 29, 2010
 Comment Period Ended August 2, 2010
 Final regulations by November 1, 2010
 Generally effective July 1, 2011
 Applicable for 2011-2012 award year
 Possible early or delayed implementation
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Program Integrity NPRM – Part 1

54
Policy Objectives –
 Ensuring that only eligible students receive
federal funds.

Protecting consumers (students and
families).

Clarifying eligible coursework.

A few others.
Program Integrity NPRM – Part 1
 Ensuring that only eligible students
receive federal funds.

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High School Diploma: Requires
institutions to develop and follow
procedures to evaluate the validity of a
student's high school diploma if the
institution or the Secretary has reason to
believe that the diploma is not valid or was
not obtained from an entity that provides
secondary school education.
Program Integrity NPRM – Part 1
 Ensuring that only eligible students
receive federal funds.

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Ability to Benefit:
 Extends eligibility for federal student aid
to students without high school diplomas
after they successfully complete six
credit hours or 225 clock hours of college
work.
 Improved oversight of test publishers,
test administrators, and testing centers.
Program Integrity NPRM – Part 1
 Ensuring that only eligible students
receive federal funds.

Satisfactory Academic Progress:
Requires a structured and consistent
approach to evaluating a student's
academic work, while continuing to provide
flexibility to institutions in establishing their
policies.
 Some relief to schools that monitor each
payment period.
57
Program Integrity NPRM – Part 1
 Ensuring that only eligible students
receive federal funds.

Verification:




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Replacing the five verification items for all
selected applicants with a targeted selection of
items based upon each student’s characteristics.
Codifying the Department’s IRS Data Retrieval
System Process.
Eliminating the 30 percent institutional
verification cap.
Requiring the processing of all changes and
corrections to an applicant’s FAFSA information.
Program Integrity NPRM – Part 1
 Protecting consumers.



59
Misrepresentation: Strengthens the
Department's authority to take action against
institutions engaging in deceptive
advertising, marketing, and sales practices,
State Authorization: Clarifies this
important State responsibility.
Incentive Compensation: Removes the
"safe harbor" provisions and generally relies
on the statutory language for guidance and
enforcement.
Program Integrity NPRM – Part 1
 Protecting consumers.

60
Disclosures regarding “Gainful
“Employment: Proprietary institutions of
higher education and other institutions with
career programs must provide prospective
students with each eligible program's
graduation and job placement rates, and
that those schools provide the Department
with information that will allow determination
of student debt levels and incomes after
program completion.
Program Integrity NPRM – Part 1
 Clarifying eligible coursework:
 Credit Hour: Defines a credit hour and
establishes procedures for accrediting
agencies to determine whether an institution's
assignment of a credit hour is acceptable.
 Retaking Coursework: Allows repeated
coursework to count toward enrollment status.
61
Program Integrity NPRM – Part 1
 Clarifying eligible coursework:
 Written Agreements:
 Limits the amount of a program that can
be provided by another school.
 Requires disclosures to students and
potential students.
 Prohibits arrangements between
ineligible institutions that have had their
Federal student aid participation
revoked.
62
Program Integrity NPRM – Part 1
 Other:
 Return of Title IV Aid:
 Modifies and clarifies the definition of
when a student is considered to have
withdrawn from a program.
 Clarifies the circumstances under which
an institution is required to take
attendance for the purpose of
determining last date of attendance.
63
Program Integrity NPRM – Part 1
 Other:
 Disbursing Federal Student Aid Funds:
Requires institution to ensure that student
has resources to obtain books and
supplies by the seventh day of payment
period.
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Program Integrity NPRM-2
GAINFUL EMPLOYMENT
NPRM published on July 26, 2010.
 Negotiations held between November 2,
2009 and January 29, 2010
 Comment Period Ended September 9, 2010
 Final regulations by November 1, 2010 and in
January, 2011
 Some provisions effective July 1, 2011
 Some provisions effective July 1, 2012
65
Program Integrity NPRM – Part 2
Why is the Department regulating to define “gainful
employment” at this time?
 Programs at for-profit institutions and occupationally
specific training at other institutions must lead to
gainful employment in a recognized occupation.
 Currently there is no standard to measure “gainful
employment”. This NPRM, when finalized, would
establish such a standard.
 Public comment received last year along with a
number of studies, reports, and media reports point
to the need to regulate in this area.
66
Gainful Employment
• Proprietary Institution of Higher Education and
Postsecondary Vocational Institution
– All programs must prepare students for
gainful employment in a recognized
occupation
• Two exceptions
– Program leading to baccalaureate degree in liberal arts
(proprietary institution)
– Comprehensive transition program for students with
intellectual disabilities (vocational institutions)
67
Gainful Employment
• Public/Private Non-profit Institution of Higher
Education
– Non-degree/certificate programs must
prepare students for gainful employment in a
recognized occupation
– Two exceptions
• Transfer program
• Comprehensive transition program for
students with intellectual disabilities
68
Gainful Employment Metrics
Repayment
Rate
69
The percentage of the outstanding principal
balance of the Federal loans taken by the
academic program’s former students who
entered repayment in the previous four
years that has been repaid.
Gainful Employment Metrics
Debt to
Earnings
Ratio
70
For the academic program’s completers, the
average educational loan payments (Federal,
private, and institutional financing plans) as
a proportion of the borrower’s income
(either discretionary income or average
annual earnings). Loan payment amount
based on a 10-year amortization schedule at
6.8 percent.
71