1 Federal Policy Making Exercise Your Rights April 16, 2008 ILASFAA Annual Conference Vicki Shipley National Council of Higher Education Loan Programs (NCHELP)

2 Agenda  Process Overview and Key Players House Senate Administration  Higher Education Act Reauthorization (will it ever happen?)  Negotiated Rulemaking  2008 Elections  Your Role and Responsibilities

3 Legislation vs. Regulation  Legislation Congress adopts with Presidential signature or after overriding a veto Amends the U.S. Code -- the “statute” (e.g., Higher Education Act)  Public Laws (110-XX)

4 Legislation vs. Regulation  Regulation Promulgated by appropriate federal agency  U.S. Department of Education for higher education programs  Reviewed by Office of Management and Budget (OMB) Interprets and adds detail to statute  Amends Code of Federal Regulations (C.F.R.)

5 5 Authorization vs Appropriation Authorizing Legislation Introduced by a Representative or Senator to Amend or Create a Federal Statute, such as, Higher Education Act (HEA) Creates programs Authorizes expenditure ceilings Appropriating Legislation Budget Bills Determines the actual amount of funding, usually less than the amount appropriated

6 LEGISLATIVE PROCESS (In a nutshell….so to speak!)  Authorization Legislation: Introduced by a Representative or Senator to Amend or Create a Federal Statute Legislation assigned to “Committee(s) of Jurisdiction” Chairman assigns to Subcommittee Hearings held on major legislation Higher Education Act to be “Reauthorized” every six years  Appropriations Legislation: Sets Annual Funding Levels for Federal Programs (aka discretionary spending)

7 LEGISLATIVE PROCESS (It Takes Two To Tango!)  Other Chamber (House or Senate) Must Act -- Two Options: Considers similar legislation at its own pace  Passes a bill that can be matched up with one passed by the other chamber  Differences must be reconciled before enactment is possible Receives legislation after other chamber acts  May approve identical bill or make amendments  “Back & forth” process, until identical bill is approved

8 LEGISLATIVE PROCESS (Final Action) Conference Committee  Attempts to resolve differences between House and Senate- passed bills  Result is a “Conference Report” -- includes explanatory language and recommendations  Identical Conference Report must be approved by House and Senate before it can be sent to the President President signs or vetoes

9 Education & Labor Committee Higher Education, Lifelong Learning & Competitiveness Subcommittee George Miller (D-CA) Chairman Howard P. “Buck” McKeon (R-CA) Ranking Member Rubén Hinojosa (D-TX) Chairman Ric Keller (R-FL) Ranking Member

10 Health, Education, Labor & Pensions Committee Children & Families Subcommittee Edward Kennedy (D-MA) Chairman Michael Enzi (R-WY) Ranking Member Chris Dodd (D-CT) Chairman Lamar Alexander (R-TN) Ranking Member

11 HEA Reauthorization  Senate reauthorization: S (passed 95-0 on July 24, 2007) The Higher Education Amendments of 2007  House reauthorization: H.R (passed on February 7, 2008) The College Opportunity and Affordability Act  Conference going on now at the staff level  HEA extended until April 30, 2008  Student loans “reauthorized” via the two reconciliation bills (HERA and CCRAA)

12 HEA Reauthorization Both the House and the Senate reauthorization bills address: Student Loan Sunshine provisions Preferred lender lists Increase Pell Grant authorization levels Address other discretionary grant programs Authorize the Perkins Program Needs Analysis FAFSA Simplification Institutional PPA Many new extra disclosures

13 The US Department of Education Secretary: Margaret Spellings

14 Lawrence Warder Chief Financial Officer / Acting COO, FSA Sara Martinez Tucker Under Secretary Diane Auer Jones Assistant Secretary, Postsecondary Education

15 Negotiated Rulemaking (Neg Reg) Secretary of Education’s Responsibility  Advise Congress Propose Legislation Provide Technical Assistance Assist with Constituent Issues  Regulates Where Needed  Enforces Laws and Regulations  Communicates with Interested Parties and the Public

16 Negotiated Rulemaking (Neg Reg)  Required by the HEA (Section 492A)  All parts of Title IV – All the time  Goal: To develop Notices of Proposed Rulemaking (NPRM) that reflects a final consensus of the negotiating committee  Consensus: There must be no dissent by any member of the committee (includes ED) to have reached consensus

17 Neg Reg 2008  Negotiated Rulemaking (Neg Reg) New regulations effective 7/1/08 from 2007 Neg Reg – inducements, preferred lender lists etc neg reg topics:  Direct Loan Public Service Loan Forgiveness  Income Based Repayment (IBR)  Conforming Economic Hardship Deferment with IBR  Definition of Not-For-Profit Loan Holder  Harmonizing HEROES Waivers with other Benefits Provided to Returning and Active Duty Military  Final Loans Team Meeting: April , 2008  Regulations will be effective July 1, 2009 and must be published in final form by November 1, 2008  Don’t forget to read the preamble!

18 Income-Based Repayment  New repayment option available 7/1/2009 for borrowers experiencing “partial financial hardship”  Eligibility and minimum monthly payment is re-evaluated annually  Government pays the interest on qualifying subsidized Stafford loans for not more than 3 years (not counting periods of Economic Hardship deferment)

19 Income-Based Repayment  The repayment period can extend beyond 10 years regardless of the amount of the eligible debt but not beyond 25 years  Includes a loan forgiveness provision after experiencing a partial financial hardship and 25 years of eligible payments

20 Income-Based Repayment  The repayment period can extend beyond 10 years regardless of the amount of the eligible debt but not beyond 25 years  Includes a loan forgiveness provision after experiencing a partial financial hardship and 25 years of eligible payments

21 Income-Based Repayment  Any loan amount that is cancelled may be taxable in the calendar year it is cancelled  IBR may not always be the best/lowest repayment option for a borrower – should consider impact of eligibility for an Economic Hardship deferment

22 Public Service Loan Forgiveness  New loan cancellation provision for Direct Loan borrowers not in default who: Have made 120 monthly payments on an eligible loan starting after 10/1/2007 Must have been “directly and full-time” employed in public service during the entire repayment period FFEL borrowers may consolidate into DL to get this benefit but ALL payments must have been in DL

23 Economic Hardship Deferment  POSSIBLE Change to the HRD  Elimination of the debt-to-income ratio calculation for purposes of determining eligibility as of 7/1/09  Currently borrowers are eligible for this deferment if their total debt is more than 20% of their income and if their income minus their loan payments leaves them with no more than 220% of the income considered poverty level in the U.S.  “Big Cost” Item—ED estimated the 10-year cost of maintaining this provision at $1.1 billion

24 NegReg  Your Role During NegReg Know who represents your segment or interests Follow the issues (IFAP, NASFAA)  Your Role After NegReg Review NPRM in Federal Register Respond within comment period  Send Comments to Department of Education (see Federal Register) w/copy to: Federal Issues Committees NASFAA

25  Two members of the Senate HELP Committee are running for President Hillary Clinton Barack Obama  Student loans and broader issues of college access were issues in the 2004 Presidential election and the 2006 Mid-Terms … they are once again be on the agenda in 2008 Candidates have already outlined higher education platforms If HEA remains incomplete, it may be on candidates’ ‘to-do’ lists

Presidential Election  Senator Barack Obama (D-IL) Supports increasing Pell Supports increasing Pell Supports elimination of FFELP Supports elimination of FFELP Simplify FAFSA Simplify FAFSA  Senator Hillary Clinton (D-NY) Increase Hope tax credit Increase Hope tax credit Adjust Pell annually to take into account increased college costs Adjust Pell annually to take into account increased college costs Supports elimination of FFELP Supports elimination of FFELP

Presidential Election  Senator John McCain (R-AZ)  Wants more disclosure of academic earmarks  Expand education benefits for military veterans

28 Be Heard!  YOU ARE THE EXPERT!  Stay in touch ( , phone, in person) with your Congressional/State legislative members. Get to know their staff  Be sure they know who you are, what you do and the students you serve – be a trusted resource  Invite members of Congress/state legislature and/or their staff to tour your facilities  Respond to NPRM’s  Volunteer to be on ILASFAA, MASFAA, NASFAA committees

29 Thank You!

30 Any Questions/Comments?