Presentation on theme: "1 Washington? COHEAO Midyear Conference St. Louis, Missouri August 1, 2011 Harrison M. Wadsworth III Executive Director Coalition of Higher Education Assistance."— Presentation transcript:
1 Washington? COHEAO Midyear Conference St. Louis, Missouri August 1, 2011 Harrison M. Wadsworth III Executive Director Coalition of Higher Education Assistance Organizations Principal, Washington Partners, LLC
COHEAO Announcements NEW MEMBERS WANTED NOW! Tell your Friends and Colleagues to join. Now is a great time to join or re-join Institutional Dues: only $190-$545 per year COHEAO working on Perkins Loans and other issues: accounts receivable, financial literacy, institutional loans (private loans.) Discounts for All Conferences! Annual Conference, Jan. 29- Feb. 1, 2012 Ritz-Carlton Pentagon City Teleconferences monthly
The Debt Ceiling House Republicans versus Senate Democrats, Obama House Republicans Divided Will USA Default? Will checks go out? Student aid? Speaker John Boehner R-OH
Reid Moves Into Forefront Senate Democrats propose plan to cut spending, increase debt ceiling by $2.7 Trillion, enough to carry through Senate Dems, Boehner include Pell Grant funds, kill subsidized Stafford Loans for graduate, professional students Obama supports Senate Majority Leader Harry Reid
With McConnell Republican Senate Leaders Plan to put Obama on the spot still in play. Republican votes needed by Reid to move something. Minority Leader Mitch McConnell (R-KY)
The President Remains Obama
Knuckle Chewing Time 8
The 112 th Congress House 240 Republicans 193 Democrats 2 Vacancies, one appointed to Senate after resignation due to sex scandal, one vacancy due to sex scandal, one more leaving soon due to sex scandal – fourth sex casualty this year (2 R, 2 D) Last Congress: 256 Democrats 179 Republicans Senate* 53 Democrats 47 Republicans Last Congress: 59 Democrats 41 Republicans * Dems include two independents who vote with Ds
Obamas Plan Agrees to cuts, insists that the debt ceiling be raised enough to get through Continues to push Pell Grant Protection Act Higher Ed support for saving Perkins 10
Presidents Pell Grant Protection Act Eliminate Current Perkins Loan Program Create New Perkins Loan Program with little resemblance to current (sound familiar?) Eliminate year-round Pell Grant Use IRS data to pre-populate FASFA Eliminate the in-school interest subsidy for grad. and professional students Allow students to convert outstanding FFEL loans to DL if some loans held by ED So Far, not happening except grad….
12 Appropriations FY 2011 Fiscal Year 2011 began Oct. 1, After excruciating debate, preparation for government shutdown, final signed April 15 Pell Grant Shortfall Partly Funded, 41.6 billion total Pell funding, including shortfall Year-round Pell eliminated to save money Boehner pledged $100 billion cut from FY2010 spending, final cut debateable New rules: all spending must be offset, no offsets needed for tax cuts; Earmarks banned LEAP eliminated
13 Pell Entitlement: Did not happen NOT an entitlement: like today, grants get partial automatic (mandatory) funding. Most funds need annual appropriation NOT big increases from SAFRA: AY2011 appropriated maximum is $4,860, of which $500 was from 2009 stimulus bill – hard to maintain. Full maximum is $5,550, with mandatory funds from eliminating FFELP, FFELP cuts in 2007 making up the difference. Dramatic increase in Pell costs and participation FY Pell = $13.6 billion FY Pell = $36.6 billion (estimated) estimated 6.2 million recipients million recipients Anticipated $20 billion Pell shortfall for this year What does it mean? Very difficult to get funding restored for Perkins Loans if Pell Grants face cuts.
14 Congress on Perkins in HEOA of 2008: Keep it HEOA SEC. 466: SENSE OF CONGRESS REGARDING FEDERAL PERKINS LOANS. It is the sense of Congress that the Federal Perkins Loan Program, which provides low-interest loans to help needy students finance the costs of postsecondary education, is an important part of Federal student aid, and should remain a campus-based aid program at colleges and universities.
Perkins Today: More Time Perkins –ED released Dear Colleague announcing Perkins is authorized through September 30, (It confirms the automatic one-year extension of the authorization through 2014.) Presidents budget: just a proposal Need your help to explain the value of Perkins No new funds likely for 2011 Restore Appropriations for Loan Cancellations: Total owed = $185 million Restore Appropriations for FCC: authorized level = $300 million per year
New Perkins – Still Pushed Interest rate hiked from 5% to 6.8% In-School Interest Benefit dropped Grace period cut from 9 to 6 months Added: 1% loan origination fee Available only to full time students Total cost for a $22,000 loan (10 yr. repayment) from $28,000 to $38,730 All new loan servicing transferred to national DL contractors Cancellation benefits like Direct Stafford: 10 years of repayment to get any benefit
New Perkins – Big New Flaw Congressional Budget Office at request of Sen. Shelby had New Perkins scored using Fair Value Accounting, taking into account risk factors, federal administrative costs. Eliminate existing Perkins Program COSTS $332 million over Costs that even using current Credit Reform Act scoring that doesnt account for all risks, costs. New Perkins Plan, as proposed by the Administration, COSTS $3.4 billion Old scoring yields savings of $4.8 billion
Perkins Alternative Ideas COHEAO has alternatives for the long term for Perkins: HEA reauthorization proposals Funding must be recognized as federal Gimmick of scoring savings from returning federal funds must be dropped Federal allocation of funds to campus Perkins Loan accounts Campus management: awards, billing, collection Student benefits, probably less generous Interest rate? Cancellations? In-school interest?
Other Issues Sessions upcoming on FDCPA, CFPB, Veterans, Financial Literacy – a variety of earthly delights… 19
Bureau of Consumer Financial Protection Launches Transfer of responsibilities from existing regulators to bureau: July 21, 2011 COHEAO submitted questions during comment period Many of employees will come from other agencies – Fed, FDIC, FTC, OTS, NCUA, HUD, Comptroller, Treasury in general Directors nomination announced July 17: former Ohio AG Richard Cordray Senate hearing Aug. 4, wont be confirmed Oversight over non-banks delayed
Bureau Leadership Elizabeth Warren, Harvard professor, who advised President Obama, organized BCFP. Today is her last day – back to Cambridge Raj Date takes over as special advisor in charge of organizing the Bureau:Financial services background, senior administrator at CFPB Richard Cordray nominated as Director
22 What Will COHEAO Be Doing? We must work to support the continuation of the Perkins Loan program and to fund it Continue to educate policymakers on the student benefits of Perkins, especially campus-based servicing Setting up state calls to Congress members COHEAO will also be working on the many other issues affecting members A/R issues: privacy, tax reporting, FDCPA, TILA, TCPA, institutional loans HHS Loan Programs Financial literacy
23 What You Can Do Weigh in: support the Perkins Program Message: cost effective financing for students and taxpayers over the long term; dont squander it for short-term goals, even Pell Grants. Information on COHEAO activities, including position papers, available at Stay In Touch with your Congressional Representatives Help educate Congressshare your stories
24 COHEAO: For the Future Recruit Members! Get your colleagues to join
25 QUESTIONS??? Washington? COHEAO Mid-Year Conference August 1, 2011 Harrison M. Wadsworth III Executive Director Coalition of Higher Education Assistance Organizations Principal, Washington Partners, LLC