Regulatory Changes and Technology Based Solutions 3 rd Annual Standards and Technology Conference Panel Discussion May 1, 2006

Introductions Kathleen Smith Pamela Roda-Kline Odette Franceskino Valerie Sherrer

Agenda Background on Legislation Community resources and analysis Panel discussion Questions

Budget Reconciliation What is reconciliation? How did it pass? – Final bill passed House on December 19, 2005 by a vote of – Final bill passed Senate, amended, on December 21, 2005 by a vote of VP casts the tie breaking vote – Bill returned to the House for a vote on February 1, 2006 and by a vote of passed and headed to the President – President signed S on February 8, 2006

Budget Reconciliation New “glitch” with final bill – Inconsistency with specific provision dealing with Medicare – Legal challenges: second suit filed 03/21 – Unclear how resolution will be reached Democrats in the House calling for a new vote Republicans saying it is law – Senate passed resolution as to intent

Higher Education Reconciliation Act SBS-S1932 – bin/query/D?c109:8:./temp/~c109NEylzV:: bin/query/D?c109:8:./temp/~c109NEylzV ED Dear Partner Letter – Another Dear Colleague forthcoming on issues other than loan programs

Industry Resources EFC: NASFAA sbsreleased html NCHELP:

Graduate PLUS Expands PLUS loan eligibility to include graduate and professional students.

Study Abroad Programs Disbursement Rules In a study abroad program, at the student’s request a loan may be disbursed by check or other means directly to the student only after the student’s enrollment is verified by the lender or guarantor.

Study Abroad Programs Disbursement Rules A student in a program of study at an eligible foreign institution may be, at the request of the foreign institution, disbursed by check or other means directly to the student only after the student’s enrollment is verified by the lender or guarantor.

Low Cohort Default Rate Exemptions Rules Reinstates the provision, previously in law, for low-cohort default rate schools (less than 10% for the three most recent fiscal years) that allows for the disbursement of any loan funds in a single installment for a single period of enrollment that is not longer than one semester, one trimester, one quarter, or a period of four months.

Identity Theft added to False Certification Discharge Reasons Loans made on or after January 1, 1986, are eligible for discharge if the loan was falsely certified as a result of a crime of identity theft.

New Interest Rates PLUS loan interest rates are set at 8.5% fixed from current variable with a cap of 9% – Disparity between FFEL and Direct *Stafford Rates will be a fixed rate of 6.8 % for loans disbursed on or after 7/1/06 – (*not technically a part of HERA)

Loan Limits Increases annual Stafford loan limits for first year students from $2,625 to $3,500, and for second-year students from $3,500 to $4,500. Increases the annual unsubsidized loan limits for graduate/professional students from $10,000 to $12,000.

Origination Fees Ultimately eliminates the 3% Stafford (subsidized and unsubsidized) origination fees over a period of five years

7/1/20062% 7/1/ % 7/1/20081% 71/ % 7/1/20100% Origination Fees (Continued)

Default Fee Adds, for Stafford and PLUS loans for which the date of guarantee is on/after July 1, 2006, a Federal default fee equal to 1 percent of principal. The default fee must be collected by deduction (proportionally) from the loan proceeds or by payment from non- Federal sources.

College Access Initiative Allows the Secretary to direct each guaranty agency to provide information to the Secretary and the public regarding postsecondary educational opportunities, programs, publications, Web sites, and other available services.

Questions?