National Association of Student Financial Aid Administrators Slide 1 © NASFAA 2011 NYSFAAA Federal Update May 13, 2011

Agenda Context Fiscal Year 2011 Fiscal Year 2012 Budget Resolution Debt Ceiling NASFAA Advocacy

Budget Context FY 2011 Budget FY 2012 Budget Debt Ceiling

Budget Characterization

Media Circus Horse Trading Passing the Buck Budget Characterization

YouGov Poll – April 2011 Public Says…

FY 2011 Budget Is…

DONE!!!

FY2011 Budget, In Review Last short-term continuing resolution (CR) expired April 14 th –This was 4 th CR, cumulative total of $12 billion in cuts On February 19 th House of Representatives passed H.R. 1, a 7- month CR –Cut $100 billion from FY 2011 requested levels –Cuts maximum Pell Grant by $845 –Eliminates funding for FSEOG and LEAP H.R 1 failed in the Senate and Senate’s alternative bill also failed

FY2011 Budget, In Review How Does It Impact Student Aid? Pell Cuts and/or Changes in Long-Term CR –Maximum $5,550 maintained—VICTORY –Elimination of Year-Round Pell –Crossover regulation lifted for summer 2011 Other Changes –0.2% percent cut across-the-board –SEOG cut by $20 million –Eliminate LEAP and Byrd Scholarships –Cut $25 million from TRIO; $20 million from GEAR UP –Cut $1.6 million from Javits Fellowships

FY 2012 Budget Process President Releases Budget Request - Done Budget resolution process - In Process Budget Conference Report President submits detailed budget request to Congress Appropriations Committees draft bills Appropriations bills voted on and passed

$20 billion shortfall for If take no action now, maximum grant could have been reduced to $3,240 (a loss of $2,310) for Budget reflects changes in existing Pell program and cuts to offset the expense of retaining a Pell maximum award of $5,550 Pell Program Outlook

The Pell Protection Act President Obama’s FY 2012 Request

Elimination of 2 nd Scheduled Awards Effective , occurred in FY 2011 CR Higher costs than expected No federal data on acceleration Savings of $8 billion in and $60 billion over next 10 years

Elimination of Subsidized Loans for Graduate Students Effective Graduate students only Subsidies are not well-targeted Subsidies don’t encourage enrollment Savings of $2 billion in and $29 billion over next 10 years

FAFSA and Verification, Savings of $340 million in FY 2012 Applicants who filed tax return before FAFSA will be directed to use IRS data retrieval –If use data retrieval, verification of that data is met –If do not use data retrieval, or subsequently change data: Must explain why to school, and May be required to verify with IRS-supplied documentation

Simplify Loan Servicing for Split Loans 6 million students have split loans Would allow all federal student loan payments to be made to one federal loan servicer Not the same as consolidation Financial incentive to borrowers to participate Savings of $2 billion in

Restructure the Perkins Loan Program Similar language as last year’s proposal Lower cost alternative to private loans Unsubsidized, 6.8% interest rate Loan funds increase from $1 billion to $8.5 billion Savings of $6.8 billion over 10 years

Other Proposals Eliminate LEAP Extend American Opportunity Tax Credit Funding at FY2010 levels for FWS, FSEOG, GEAR UP Small funding increase for TRIO programs Replace TEACH Grant program with Presidential Teaching Fellows program $1.25 billion over 5 years to reward states and institutions that help more students earn degrees

FY 2012 Budget Resolution Released last month by Chairman Ryan (R-WI) The Path to Prosperity: Restoring America’s Promise Cuts $6.2 trillion in government spending, compared to President Obama’s FY 2012 request Reduces deficit by $4.4 billion, compared to President Obama’s FY 2012 request Repeal and defund HCERA

For Pell, the assumptions are: - Lower the maximum award (apparently to pre-ARRA levels which we believe is FY 2008 levels – apx. $17 billion - Limit Pell grants to 6 years (12 semesters) - Eliminate College Cost Reduction and Access Act of 2007 [CCRAA] provisions, including auto-zero, IPA amounts. - Eliminate administrative fees paid to participating institutions. - Elimination of HCERA could include mandatory Pell savings and strengthened IBR provisions. FY 2012 House Budget Resolution

Debt Ceiling Debt Ceiling: Cap set by Congress on the amount of debt the federal government can legally borrow –Current is $ trillion –Will likely reach this amount by May 16 th, but Aug 2 extension Congress will have to vote to raise debt ceiling –This is typical, done so 10x since 2001 –Likely tough fight on this ahead

What’s Going On Right Now? What does the Senate Say? House 302 (a) Allocations?

Advocacy Build relationships with your lawmakers now by delivering information sheets on how their constituents—the students and families you serve—benefit from the student aid programs. Follow the latest legislative developments by reading Today’s News, the NASFAA Advocate, and following us on the NASFAA Facebook page and the Save Student Aid Facebook page.Today’s NewsNASFAA AdvocateNASFAA Facebook pageSave Student Aid Facebook page Share with NASFAA all your correspondence with lawmakers so we can support you and understand how to better work with your Congressional delegates. Visit NASFAA’s “Take Action Page” to stay up-to-date on NASFAA’s latest calls to action.Take Action Page

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