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Federal Update: Everything but HEOA Presented by Zack Goodwin – Harvard University Financial Aid Compliance and Training Officer Bernie Pekala – Boston.

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Presentation on theme: "Federal Update: Everything but HEOA Presented by Zack Goodwin – Harvard University Financial Aid Compliance and Training Officer Bernie Pekala – Boston."— Presentation transcript:

1 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

2 Agenda College Cost Reduction and Access Act (CCRAA) of 2007 College Cost Reduction and Access Act (CCRAA) of 2007 Ensuring Continued Access To Student Loans Act (ECASLA) of 2008 Ensuring Continued Access To Student Loans Act (ECASLA) of 2008 Post-9/11 Veterans Educational Assistance Act of 2008 Post-9/11 Veterans Educational Assistance Act of 2008

3 College Cost Reduction and Access Act (CCRAA) Signed into law September 27, 2007; many provisions were effective October 1 Signed into law September 27, 2007; many provisions were effective October 1 Budget reconciliation measure Budget reconciliation measure

4 Pell Grants Secs. 101, 102(a) and 102(b) Eliminated tuition sensitivity as of July 1, 2007Eliminated tuition sensitivity as of July 1, 2007 Increases the maximum authorized amount:Increases the maximum authorized amount:  $4,800 for award years and (increase of $490 over )  $5,000 for award years and (increase of $690)  $5,400 for the award year (increase of $1,090)

5 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, 2008New grant program for current or prospective teachers attending eligible institutions, effective July 1, 2008 Grants may be made up to $4,000 per academic yearGrants 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

6 TEACH Eligibility Minimum GPA of 3.25 on a zero to 4.0 scale ORMinimum 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 testScored above the 75th percentile on at least one battery of an undergraduate, post-baccalaureate, or graduate school admission testAND (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 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(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

7 TEACH Recipient Obligations Serve as a full-time “highly qualified” teacher for at least 4 academic years within 8 years after completing educationServe 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 schoolTeach in a public or other qualified nonprofit private elementary or secondary school Teach in a high-need fieldTeach in a high-need field OR ELSE…the TEACH Grant(s) are converted to unsubsidized Direct Loan(s) with interest applied retroactively

8 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 2009New 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’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’

9 Practice exams and tutorials for standardized testsPractice exams and tutorials for standardized tests Virtual campus toursVirtual campus tours Assistance in completing the FAFSAAssistance in completing the FAFSA Grant and scholarship research toolsGrant and scholarship research tools College application and letter of recommendation tracking toolsCollege application and letter of recommendation tracking tools High school transcript electronic submission toolHigh school transcript electronic submission tool The Massachusetts College and Career Web Portal will offer students, parents and counselors:

10 Need Analysis Sec.104 Set specific increases in the student Income Protection Allowance (IPA) for years Set specific increases in the student Income Protection Allowance (IPA) for years  Applies to dependent and independent students  After , IPA is thereafter tied to the Consumer Price Index  Parent IPA is linked to the Consumer Price Index as of Expanded eligibility for the Simplified Needs Test and the Automatic Zero EFC Expanded eligibility for the Simplified Needs Test and the Automatic Zero EFC Eliminated consideration of certain untaxed income Eliminated consideration of certain untaxed income

11 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 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) Debt burden criterion for the deferment was eliminated (though maintained by the Secretary through June 30, 2008)

12 Military Deferment Secs. 202, 204 Final Rules Published October 23, 2008 Available to FFELP, Direct Loan and Perkins borrowers regardless of disbursement date Available to FFELP, Direct Loan and Perkins borrowers regardless of disbursement date 3-year limit on military deferment removed 3-year limit on military deferment removed Deferment extended 180 days following demobilization Deferment extended 180 days following demobilization

13 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 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 Parent PLUS borrowers are not eligible for this plan, including borrowers with consolidation loans that have underlying parent PLUS loans

14 Income-Based repayment Plan continued… Borrower’s eligibility evaluated annuallyBorrower’s eligibility evaluated annually Education Department pays interest on subsidized loans for the first 3 yearsEducation 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 defermentRemaining 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, 2009Effective Date: July 1, 2009

15 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 Balance of interest and principal forgiven after 120 payments, beginning October 1, 2007 Amount forgiven will not be taxable Amount forgiven will not be taxable Borrowers must: Borrowers must:  Not be in default  Make their 120 monthly payments in Direct Lending (  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

16 What Is Public Service? Employment by a nonprofit, tax-exempt 501(c)(3) organization Employment by a nonprofit, tax-exempt 501(c)(3) organization Employment by the federal government, a state government, local government, or tribal government (including the military and public schools and colleges) Employment by the federal government, a state government, local government, or tribal government (including the military and public schools and colleges) Service in a full-time AmeriCorps or Peace Corps position Service in a full-time AmeriCorps or Peace Corps positionOR The Department of Education's regulations created a two-part test of other circumstances under which students may still be eligible: 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

17 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 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,  3.4% on or after July 1, 2011 and before July 1, 2012

18 Lender/Guarantor Impacts Secs. 301, 302, 305, 306, 701 Reduced guaranty agency collection retention and account maintenance feesReduced guaranty agency collection retention and account maintenance fees Reduced lender insurance percentage and Special Allowance PaymentsReduced lender insurance percentage and Special Allowance Payments Increased lender origination feesIncreased lender origination fees Eliminated Exceptional Performer StatusEliminated Exceptional Performer Status

19 Lender/Guarantor Impacts continued… Created PLUS Loan auction pilot program 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

20 Professional Judgment Dependency Overrides 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 Adds dislocated worker and homeless statuses to areas meriting professional judgment

21 Ensuring Continued Access to Student Loans Act (ECASLA) Original legislation ( ) signed May 7, 2008Original legislation ( ) signed May 7, 2008 One year extension ( ) signed October 7, 2008One year extension ( ) signed October 7, 2008

22 Goals of ECASLA Ensure availability of FFEL and Direct Ensure availability of FFEL and Direct student loans for Uphold the public/private partnership Uphold the public/private partnership Protect taxpayer interests (no net costs) Protect taxpayer interests (no net costs) Provide liquidity and support needed to stabilize the student loan marketplace Provide liquidity and support needed to stabilize the student loan marketplace

23 Programs of ECASLA Programs of ECASLA Purchase of Participation Interests (PPI) Purchase of Participation Interests (PPI) Loan Purchase (PUT) Loan Purchase (PUT) The Conduit (New-11/10/08) The Conduit (New-11/10/08)  Liquidity support to conforming Asset-Backed Commercial Paper (ABCP) conduits

24 Post 9/11 Veterans Educational Assistance Act of 2008 (New GI Bill) Became law on May 7, 2008Became law on May 7, 2008

25 Details of the New GI Bill Entitlement (Section 3311): Two years of active duty with some after 09/10/08 Entitlement (Section 3311): Two years of active duty with some after 09/10/08 Duration (Section 3312): 4 academic years which equals 36 months Duration (Section 3312): 4 academic years which equals 36 months

26 Details of the New GI Bill continued… Payment (Section 3313): 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 Tutorial Assistance (Section 3314): $100/month up to a maximum $1,200

27 Details of the New GI Bill (cont.) Licensure Payment (Section 3315): Up to $2,000 for one licensing/certification 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 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 Transfer of Unused Benefits (Section 3319): Allows transfer to spouse 6(+4) and/or child (10) years of service

28 Resources thomas.loc.gov thomas.loc.gov edlabor.house.gov edlabor.house.gov help.senate.gov help.senate.gov

29 Questions?


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