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LASFAA Spring Conference March 8, 2012 Federal Student Aid Update 1.

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Presentation on theme: "LASFAA Spring Conference March 8, 2012 Federal Student Aid Update 1."— Presentation transcript:

1 LASFAA Spring Conference March 8, 2012 Federal Student Aid Update 1

2 FSA Update will be posted to LASFAA’s website. www.lasfaa.org

3 How is the Ride in Financial Aid?

4 Recent Legislation and Ramifications of Old Legislation

5 Budget Control Act of 2011 (BCA)

6 BCA - Subsidized Loans Elimination of Subsidized Loans for Graduate Students –Effective for loans made for loan periods beginning on or after July 1, 2012 –Subsidized Loans for loan periods beginning before July 1, 2012 remain unchanged –COD will edit for compliance 6

7 BCA - Repayment Incentives Elimination of Direct Loan Incentives –Terminates repayment incentives to encourage on-time repayment of loans –Effective for loans first disbursed on or after July 1, 2012 –COD will edit for compliance –Allows interest rate reduction to borrowers who repay electronically 7

8 Consolidated Appropriations Act – 2012 See DCL GEN-12-01

9 2012-2013 Pell Grant Amounts 2012-2013 Pell maximum award - $5,550 2012-2013 Pell minimum award - $550 Maximum Pell eligible EFC is 4995 Was 5273 in 11-12 2012-2013 payment schedules posted IFAP on January 12, 2012 (P-12-01)

10 Auto-Zero EFC Income Threshold Reduces the income threshold for an automatic zero expected family contribution (EFC) from $30,000 to $23,000 For the 2012-2013 award year was scheduled to be $32,000 FAFSA on the Web and CPS have been updated, and both began 2012-2013 FAFSA processing using $23,000 as the auto-zero EFC threshold

11 Ability-to-Benefit (ATB) Eliminates Title IV eligibility for students without a high school diploma (or equivalent) Exceptions for Home schooled students Students who were enrolled in a Title IV eligible program of study prior to July 1, 2012

12 Ability-to-Benefit (ATB) Students who are or were, enrolled in a Title IV eligible program anytime prior to July 1, 2012, may continue to qualify under one of the ATB alternatives – Passing an independently administered, approved ATB test Successfully completing at least six credit hours or 225 clock hours

13 Pell Grant Duration of Eligibility Reduces the duration of a student’s eligibility to receive Pell Grant from 18 semesters (or its equivalent) to 12 semesters (or its equivalent) Applies to all students effective with the 2012-13 award year Calculation includes all earlier years of the student’s receipt of Pell

14 Pell Grant Duration of Eligibility Calculate the equivalency by adding together each of the annual percentages of a student’s scheduled award that was actually disbursed to the student LEU – Lifetime Eligibility Used Once LEU reaches 600%, student no longer eligible If LEU more than 500% but less than 600%, partial eligibility for next award year

15 Pell Grant Duration of Eligibility Examples – Student’s Scheduled Award was $5,550, but only received $2,775 because only enrolled for one semester, will have used 50% of that award year’s scheduled award Student who was enrolled three-quarter time for the entire award year would have used 75% of his scheduled award

16 Pell Grant Duration of Eligibility Electronic Announcement posted on February 17 Beginning mid April, COD will begin sending – Weekly reports to schools of their 2012-2013 applicants who have LEUs of more than 450% Emails to students who have LEUs of more than 450%

17 Pell Grant Duration of Eligibility Electronic Announcement posted on February 17 Beginning in July – NSLDS will display student’s LEU CPS will use comment codes to flag students whose LEU is close to or exceeds 600%

18 Grace Period Interest Subsidy Temporarily eliminates the interest subsidy on Direct Subsidized Loans during the six month grace period Applies to new Direct Stafford Loans for which the first disbursement is made on or after July 1, 2012, and before July 1, 2014

19 CCRAA of 2007 Interest Rate Reductions First disbursement of a loan: Interest rate on the unpaid balance Made on or afterAnd made before July 1, 2008July 1, 20096.0 percent July 1, 2009July 1, 20105.6 percent July 1, 2010July 1, 20114.5 percent July 1, 2011July 1, 20123.4 percent

20 CCRAA of 2007 Interest Rate Reductions Will sunset on June 30, 2012 All Stafford Loans, grad and undergrad, sub and unsub, first disbursed on July 1, 2012 or later –Will have interest rate of 6.8% –6.8% was the pre-CCRAA rate Requires change in law to prevent automatic increase

21 President’s FY 13 Budget

22  $5,635 maximum Pell Grant award for 2013-2014  Maintain the subsidized loan interest rate for undergraduate students at 3.4 percent for undergraduates until July 1, 2013  Limit the duration of the Stafford Loan in- school interest subsidy to 150 percent of the normal time required to complete the borrowers’ educational program FY 13 Budget

23  Expand and improve the Perkins Loan program to provide $8.5 billion in loans annually  Provide $150 million in new funds for the Work-Study Program  Reform and expand Federal allocations in the campus-based programs FY 13 Budget

24 FFEL/Direct Loan Cohort Default Rates

25 What is the CDR Calculation? A 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 (October 1 through September 30) who default in that federal fiscal year or by the end of the next federal fiscal year.

26

27 HEOA Changes Increases the CDR monitoring period from two to three years. Beginning with the 2009 cohort, the calculation will be: –Borrowers who default in that federal fiscal year or by the end of the next two federal fiscal years –Establishes a three-year transition period for sanctions

28 2-Year Versus 3-Year Calculation 28 The Numerator is the number of borrowers from the denominator who default within a cohort period The Denominator is the number of borrowers who enter repayment within a cohort period 355 5000.071 or 7.1% 605 5000.121 or 12.1% 5,000 FY-09FY-10 125 230 5,000 FY-09FY-11FY-10 125230250

29 29 Transition Period

30 CDR Sanctions Sanctions based 3 year CDRs will not be implemented until 2014 School’s 3 most recent official CDRs are 25.0% or higher for the 2 year calculation OR 30.0% or higher for the 3 year calculation Loss of Pell and DL for the current year and two subsequent fiscal years A school‘s current official CDR is greater than 40.0%, for either 2 year and 3 year calculation. Loss of DL for the current year and two subsequent fiscal years

31 If 2009 3 Year CDR is ≥ 30.0% Identify the factors causing the default rate to exceed the threshold; Establish measureable objectives and the steps the school will take to improve its cohort default rate; and Specify the actions the school will take to improve student loan repayment, including counseling students on repayment options.

32 Program Integrity Regulations

33 Program Integrity - Resources Notice of Proposed Rulemaking—June 18, 2010 Final regulations—October 29, 2010 Program Integrity Questions and Answers http://www2.ed.gov/policy/highered/reg/hearulema king/2009/integrity-qa.html

34

35 High School Diploma

36 Schools must develop and follow procedures to evaluate the validity of a student's high school diploma if the school 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. 36

37 High School Diploma FAFSA will ask student to indicate high school. –Being on the list does not mean “approved” –Not being on the list does not mean “unapproved” or “questionable” 37

38 Verification

39 Verification Resources Federal Register Notice of Information To Be Verified for the 2012–2013 Award Year http://www.ifap.ed.gov/fregisters/FR071311FAFSA Information.html http://www.ifap.ed.gov/fregisters/FR071311FAFSA Information.html GEN-11-13 and GEN-11-03 http://www.ifap.ed.gov/dpcletters/GEN1113.html http://www.ifap.ed.gov/dpcletters/GEN1103.html http://www.ifap.ed.gov/dpcletters/GEN1113.html http://www.ifap.ed.gov/dpcletters/GEN1103.html 39

40 Verification Resources Q&A on Program Integrity web site: –http://www2.ed.gov/policy/highered/reg/hearul emaking/2009/verification.htmlhttp://www2.ed.gov/policy/highered/reg/hearul emaking/2009/verification.html Sample 2012-13 Verification Worksheets –http://www.ifap.ed.gov/eannouncements/0203 12SampleVerificationWorksheets1213.htmlhttp://www.ifap.ed.gov/eannouncements/0203 12SampleVerificationWorksheets1213.html 40

41 Verification Resources FAFSA-IRS Tax Return Transcript Matrix –http://www.ifap.ed.gov/eannouncements/0224 12Verification1213IRSTaxReturnMatrix.htmlhttp://www.ifap.ed.gov/eannouncements/0224 12Verification1213IRSTaxReturnMatrix.html 2012-13 Application and Verification Guide –http://ifap.ed.gov/fsahandbook/1213FSAHand bookAVG.htmlhttp://ifap.ed.gov/fsahandbook/1213FSAHand bookAVG.html 41

42 Verification - Definitions Subsidized student financial assistance programs –Eligibility uses EFC –Verification applies –Pell, FSEOG, FWS, Perkins, Direct Subsidized Loan Unsubsidized student financial assistance programs –Eligibility does not use EFC –Verification does not apply –Direct Unsubsidized Loan & Direct PLUS Loan –TEACH Grant 42

43 Verification Selection CPS applies risk model to FAFSA data Goal is to target verification based upon the most error prone data items specific to an applicant Non-selected applicants are again subject to risk model when submitting corrections 43

44 Verification Selection Institutions must verify all applicants selected by CPS Removes institution’s option to verify only 30% of applicant pool 44

45 Changes To FAFSA Information For subsidized programs, submit all verification changes to CPS if change is: –To any nondollar item or –A single dollar item of $25 or more $400 tolerance is eliminated If required to submit one change, must submit all changes 45

46 Verification Items Regulation eliminates five required verification items Annual Federal Register notice lists verification items and acceptable documentation –2012-13 notice published 7/13/11 46

47 Verification Items Goal to specify required verification items for individual applicant on SAR/ISIR Institution may select additional applicants or verify additional items for an applicant 47

48 2012-13 Verification Items All applicants— –Household size –Number in college –SNAP benefits (formerly food stamps)—if receipt reported on FAFSA –Child support paid—if amount reported on FAFSA 48

49 2012-13 Verification Items Tax filers— –Adjusted gross income –U.S. income tax paid –Education credits –Specific untaxed income items Untaxed IRA distributions Untaxed Pensions IRA deductions Tax Exempt Interest –Making Work Pay will not be on 2011 returns 49

50 2012-13 Verification Items Non-tax filers –Income earned from work 50

51 Acceptable Documentation For items on 2011 income tax return— Amounts retrieved & unchanged from IRS via FOTW (either on initial or correction application) with IRS Request Flag value of 02 OR 51

52 Acceptable Documentation A tax return transcript obtained from the IRS—see DCL GEN-11-13 For all other verification items— Verification worksheet—either ED’s sample or developed by institution 52

53 IRS Data Retrieval FAFSA on the Web IRS Data Retrieval Process will only transfer information from an original tax return and not from an amended tax return

54 IRS Transcripts IRS Tax Return Transcript only includes information from the original tax return. IRS Tax Account Transcript, does include tax return items that were changed when an amended return was filed, it does not include all of the data that did not change. Therefore, both an IRS Tax Return Transcript and an IRS Tax Account Transcript must be obtained from the IRS when an amended return was filed.

55 IRS Record of Account Record of Account which includes the required information from both the IRS Tax Return Transcript and the IRS Tax Account Transcript. Record of Account can only be requested using a paper IRS Form 4506-T and, as a paper request, it could take up to 30 days for the tax filer to receive the Record of Account, whereas the IRS Tax Return Transcript and IRS Tax Account Transcript can be requested electronically from the IRS or by phone, which for electronic filers will yield quicker results.

56 Acceptable Documentation IRS Data Retrieval Process IRS Tax Return Transcript –By paper (Form 4506T-EZ or IRS Form 4506-T) 10 business days for processing –Online or by phone—5 to10 business days for processing IRS Tax Account Transcript (used with amended returns) –By paper (Form 4506-T)—processed within 30 calendar days –Online or by phone—5 to 10 business days for processing 56

57 Acceptable Documentation Record of Account –By paper only (Form 4506-T)—processed within 30 calendar days 57

58 Documentation: Household Size Household size Signed statement including— Name of each household member, Age of each household member, AND The relationship to the applicant 58

59 Exceptions: Household Size For dependent student when parental marital status is- –Single, separated, divorced, or widowed and family size on the FAFSA = 2 –Married and family size on the FAFSA = 3 For independent student who is- –Single, separated, divorced, or widowed and family size on the FAFSA = 1 –Married and the family size on the FAFSA = 2 59

60 Documentation: Number in College Number in college Signed statement Name and age of each household member who will attend eligible postsecondary educational institution at least half-time in 2012–2013 Name of the eligible institution(s) that each household member is or will be attending during 2012–2013 Not required if applicant is only member in college 60

61 Documentation: SNAP Supplemental Nutrition Assistance Program (SNAP) benefits (formerly food stamps) if receipt is reported on the FAFSA –Certification on verification worksheet –Institution may request documentation from the agency that issues the SNAP benefit –FOTW users who get SNAP may never see the question 32 61

62 Documentation: Child Support Child support paid if reported on the FAFSA Certification on verification worksheet (or separate statement) indicating— –Amount of child support paid –Name of the person to whom it was paid, and –Name of the children for whom it was paid 33 62

63 IRS Extension Filers Verification is complete if you have -- –Documentation of IRS extension and –2011 W-2 Forms or statement from self- employed individual MAY require an individual granted a tax filing extension to provide a copy of their completed and signed tax return when filed 63

64 IRS Extension Filers MUST verify AGI and taxes paid, if you receive a copy of the return May return all funds disbursed, if you do not receive copy 64

65 Verification & PJ Requires verification of all selected applicants before exercising professional judgment Does not mean verification is required before exercising PJ for non-selected applicants 65

66 General Updating FAFSA-reported info is generally a snapshot Unless due to student’s marital status change, must update for— –Dependency status changes (all applicants, anytime) AND –Household size and number in college (selected applicants, at the time of verification) 66

67 Marital Status Updating Marital status updates permitted only by FAA to address inequity or better reflect ability to pay— –When dependency status changes –AND/OR –When selected applicant needs to update household size and number in college If FAA changes marital status, other updates may be needed 67

68 Interim Disbursements May make interim disbursements without receipt of corrected ISIR if completed verification makes no change to aid eligibility All required corrections must be submitted to CPS AND school must receive revised ISIR transaction OR school will be liable for payment student receives 68

69 Verification After Enrollment Ends Student no longer limited to lesser Pell Grant award if verification completed after enrollment ends Student will receive Pell Grant payment based upon correct EFC 69

70 Process is a Work in Progress Keep watching IFAP for Q&As, EAs, and DCLs Watch for an updated Matrix Watch for info about multiple requests for the same transcript Watch for the Federal Register where 13-14 verification elements will be identified

71 Gainful Employment

72 Gainful Employment Info Gainful Employment Page on IFAP at: http://ifap.ed.gov/GainfulEmploymentInfo/ or from IFAP Homepage http://ifap.ed.gov/GainfulEmploymentInfo/ –Regulations and Federal Register Notices –Dear Colleague Letters and Electronic Announcements –Frequently Asked Questions –Training, including webinars –Resources 72

73 GE Reporting Institutions must annually report information about students enrolled in GE Programs General information on reporting was provided in the Dear Colleague Letter GEN-11-10Dear Colleague Letter GEN-11-10 NSLDS GE Reporting Guide at - http://ifap.ed.gov/GainfulEmploymentInfo/ index.html http://ifap.ed.gov/GainfulEmploymentInfo/ index.html 73

74 GE Reporting Reporting is by – –Award Year –Student –GE Program Institution (Six-digit OPEID) CIP Code (See User Guide) Credential Level (See User Guide) 74

75 GE Metrics  Metrics final rule published on June 13, 2011  Defines “gainful employment” to be when a substantial number of the GE Program’s students –  Are repaying their Title IV loans –  Repayment Rate  Have a reasonable debt burden –  Debt to Earnings Ratios. 75

76 GE Metrics  ED calculates Repayment Rate as –  A percentage of the Title IV loan amounts that a GE Program’s former students are repaying  ED calculates Debt to Earnings Ratios as –  The median educational loan annual repayment amount as a proportion of the borrowers’ average annual income 76

77 Title IV Eligibility A program must pass at least one of the following three rates to be a Gainful Employment Program eligible for Title IV participation: –Repayment rate of at least 35%. –Debt-to-Earnings ratio of less than 12% of total annual earnings, or –Debt-to-Earnings ratio of less than 30% of total discretionary income. 77

78 Title IV Eligibility If a failing program for three of four years, program loses eligibility for Federal student aid. 78

79 General Information: IFAP Website Gainful Employment Information Page Policy Questions: ge-questions@ed.gov Reporting Questions: nslds@ed.gov 79 GE Contact Information

80 Negotiated Rulemaking Federal Register Notice— –October 28, 2011 Two teams— –Student loan issues –Teacher preparation issues http://www2.ed.gov/policy/highered/reg/ hearulemaking/2011/index.htmlhttp://www2.ed.gov/policy/highered/reg/ hearulemaking/2011/index.html

81 Negotiated Rulemaking Federal Register Notice— –October 28, 2011 Two teams— –Student loan issues –Teacher preparation issues http://www2.ed.gov/policy/highered/reg/ hearulemaking/2011/index.htmlhttp://www2.ed.gov/policy/highered/reg/ hearulemaking/2011/index.html

82 Other Resources

83 General Title IV Treatment of An Award for 2011-2012 * *Federal veterans education benefits, as defined in section 480(c) of the HEA, and the Iraq and Afghanistan Service Grant are not EFA nor used in calculating EFC START Is award received because of postsecondar y enrollment or to pay for education costs? Is award considered employment according to Federal or State rules? [STOP] Treat as EFA (If in income, list amount in FAFSA question 43) Is employment based on need? [STOP] Not EFA (If in income, it remains in income) [STOP] Treat as EFA (If in income, list amount in FAFSA question 43) Yes No Yes No Yes No [STOP] Not EFA (If in income, it remains in income )

84 FSA Training No in-person training scheduled this year except for FT4 Variety of CBTs are available Variety of webinars are planned –Business Officer Series –Default Aversion webinars –Some webinars are only recorded GE Guide is planned for release soon TOPICS Survey

85 FSA Conference 2011 presentations are moving from one server to another and will be available again soon 2012 FSA Conference will occur –Location TBD

86 86 Supervisor of Training Officers Requests Feedback from FAAs Jo Ann Borel Supervisor of Training Officers United States Department of Education- Federal Student Aid Phone: 202-377-3930 joann.borel@ed.gov

87 Contact Information Kevin Campbell Training Officer United States Department of Education kevin.campbell@ed.gov 214.661.9488 87


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