1. Washington Update So, It's Come At Last. At Last It's Come. The Day I Knew Would Come At Last Has Come, At Last. So, It's Come At Last. At Last It's Come. The Day I Knew Would Come At Last Has Come, At Last. Scott E. Miller PHEAA smiller1@pheaa.org April 2010

2. So, What is There to Talk About?  What Happened?  The New SAFRA  President’s Budget Proposal  What Could Be Next?

3. Isn’t July 1, 2010 Soon?  91 Days From April 1 st Until July 1, 2010  13 Weeks  2,184 hours  131,040 minutes  7,862,400 seconds  91 Days From April 1 st Until July 1, 2010  13 Weeks  2,184 hours  131,040 minutes  7,862,400 seconds  86 Days From April 6 th Until July 1, 2010  12 Weeks  2,064 hours  123,840 minutes  7,430,400 seconds

4. Do You Remember SAFRA?  Student Aid and Fiscal Responsibility Act  Passed House of Representatives on September 17, 2009 (253 – 171)  Never Considered By the Senate HELP Committee  Meets Budget Reconciliation Instruction  Net savings more than $1 Billion  Student Aid and Fiscal Responsibility Act  Passed House of Representatives on September 17, 2009 (253 – 171)  Never Considered By the Senate HELP Committee  Meets Budget Reconciliation Instruction  Net savings more than $1 Billion

5. What the Heck is Budget Reconciliation?  Authorized By the Congressional Budget Resolution  2010 Resolution authorized reconciliation for Education and Health Care  Reconciliation “instruction” expires when new Budget Resolution is passed  Not Subject to Filibuster  Limited Time for Debate  Provisions Must Affect “Mandatory Spending” By:  Decreasing (e.g., spending cuts) or  Increasing (e.g., tax cuts)  “Byrd Rule” excludes extraneous measures  Resolution and Spending “Baseline” Must Apply to Whole Bill  Senate Can Consider Only One Reconciliation Bill Per Budget Resolution  Authorized By the Congressional Budget Resolution  2010 Resolution authorized reconciliation for Education and Health Care  Reconciliation “instruction” expires when new Budget Resolution is passed  Not Subject to Filibuster  Limited Time for Debate  Provisions Must Affect “Mandatory Spending” By:  Decreasing (e.g., spending cuts) or  Increasing (e.g., tax cuts)  “Byrd Rule” excludes extraneous measures  Resolution and Spending “Baseline” Must Apply to Whole Bill  Senate Can Consider Only One Reconciliation Bill Per Budget Resolution

6. The Process  Patient Protection and Affordable Care Act (H.R. 3590)  Senate passed with 60 votes on Christmas Eve  House passed on March 21 st (219 – 212)  President Obama signed into law on March 23rd  Health Care And Education Affordability Reconciliation Act of 2010 (H.R. 4872)  Reconciliation Bill includes revisions to H.R. 3590 and modified SAFRA  House passed on March 21 st (220 – 211)  Senate passed amended version on March 25 th  “Ping-ponged” back for House approval on March 25 th  Patient Protection and Affordable Care Act (H.R. 3590)  Senate passed with 60 votes on Christmas Eve  House passed on March 21 st (219 – 212)  President Obama signed into law on March 23rd  Health Care And Education Affordability Reconciliation Act of 2010 (H.R. 4872)  Reconciliation Bill includes revisions to H.R. 3590 and modified SAFRA  House passed on March 21 st (220 – 211)  Senate passed amended version on March 25 th  “Ping-ponged” back for House approval on March 25 th

7. What Was In SAFRA?  100% Direct Lending as of 7/1/10  Revamped Perkins Loan Program  “Guaranteed” Increases in Pell Grant Maximum – CPI + 1%  FAFSA Simplification  College Access & Completion Innovation Funds  Funding for Community Colleges, HBCUs, Early Childhood Education, and Other Items  Approx. $8 billion for “Deficit Reduction”  100% Direct Lending as of 7/1/10  Revamped Perkins Loan Program  “Guaranteed” Increases in Pell Grant Maximum – CPI + 1%  FAFSA Simplification  College Access & Completion Innovation Funds  Funding for Community Colleges, HBCUs, Early Childhood Education, and Other Items  Approx. $8 billion for “Deficit Reduction”

8. What’s Old is New Again… The “Old” SAFRA  Eliminate FFEL as of 7/1/10  Increase Administrative Funding for Direct Lending  Allow Non-Profit Agencies to Service Direct Loans  $50m for DL Transition  Increase Pell Max. by CPI+1  Cut Interest Rates for Subsidized Undergrads  Revamp Perkins Program  FAFSA Simplification (e.g.., Eliminate Assets)  College Access Completion & Innovation Funds  Increase College Access Challenge Grant Funding  Grants to Community Colleges  HBCU & HSI Funding  SEOG for Veterans  Early Learning Challenge Grants  $8b Towards Deficit Reduction The “Old” SAFRA  Eliminate FFEL as of 7/1/10  Increase Administrative Funding for Direct Lending  Allow Non-Profit Agencies to Service Direct Loans  $50m for DL Transition  Increase Pell Max. by CPI+1  Cut Interest Rates for Subsidized Undergrads  Revamp Perkins Program  FAFSA Simplification (e.g.., Eliminate Assets)  College Access Completion & Innovation Funds  Increase College Access Challenge Grant Funding  Grants to Community Colleges  HBCU & HSI Funding  SEOG for Veterans  Early Learning Challenge Grants  $8b Towards Deficit Reduction The “New” SAFRA  Eliminate FFEL as of 7/1/10  Increase Administrative Funding for Direct Lending  Allow Non-Profit Agencies to Service Direct Loans  $50m for DL Transition  Increase Pell Max. by CPI  Limited In-School Consolidation  Lower IBR Payments for New Borrowers in 2014  Increase College Access Challenge Grant Funding  HBCU & HSI Funding  Funding of Job Training Programs for Community Colleges  $10b Towards Deficit Reduction  $9b To Increase Savings in Health Care Bill The “New” SAFRA  Eliminate FFEL as of 7/1/10  Increase Administrative Funding for Direct Lending  Allow Non-Profit Agencies to Service Direct Loans  $50m for DL Transition  Increase Pell Max. by CPI  Limited In-School Consolidation  Lower IBR Payments for New Borrowers in 2014  Increase College Access Challenge Grant Funding  HBCU & HSI Funding  Funding of Job Training Programs for Community Colleges  $10b Towards Deficit Reduction  $9b To Increase Savings in Health Care Bill

9. How Did SAFRA Become “SAFRA Lite”?  CBO Scores Shift to 100% Direct Lending  FY 2010 Baseline: $81b over 10 years  FY 2011 Baseline: $61b over 10 years  SAFRA Pell Funding  FY 2010 Baseline: $37b over 10 years  FY 2011 Baseline: $68b over 10 years  Pell Grant Entitlement  CBO FY 2011 Baseline: $197b over 10 years  Can Use Only One Baseline In a Reconciliation Bill  CBO Scores Shift to 100% Direct Lending  FY 2010 Baseline: $81b over 10 years  FY 2011 Baseline: $61b over 10 years  SAFRA Pell Funding  FY 2010 Baseline: $37b over 10 years  FY 2011 Baseline: $68b over 10 years  Pell Grant Entitlement  CBO FY 2011 Baseline: $197b over 10 years  Can Use Only One Baseline In a Reconciliation Bill

10. So What Changed?  $37b for Pell Doesn’t Go as Far as it Used To (i.e., “last year”)  Items That Didn’t Make the Cut:  Perkins Overhaul  Cutting Interest Rates  FAFSA Simplification  ECASLA Extension  Funding beyond 2010 for DL transition costs  Private Loan Debt Swap  Reconsolidation  $37b for Pell Doesn’t Go as Far as it Used To (i.e., “last year”)  Items That Didn’t Make the Cut:  Perkins Overhaul  Cutting Interest Rates  FAFSA Simplification  ECASLA Extension  Funding beyond 2010 for DL transition costs  Private Loan Debt Swap  Reconsolidation

11. Some Specifics…  No Alternative to Direct Lending for Loans First Disbursed On Or After July 1, 2010  Pell Grant Maximum  $5,550 for 2010-11, 2011-12, 2012-13  Beginning in 2013, increases at rate of Consumer Price Index (CPI)  Provision prohibiting decrease in Pell maximum deleted due to Byrd Rule  Estimate of $5,900 Pell Grant for 2019-20 Down from original estimate of $6,900 Increased demand, larger shortfall caused cut  No Alternative to Direct Lending for Loans First Disbursed On Or After July 1, 2010  Pell Grant Maximum  $5,550 for 2010-11, 2011-12, 2012-13  Beginning in 2013, increases at rate of Consumer Price Index (CPI)  Provision prohibiting decrease in Pell maximum deleted due to Byrd Rule  Estimate of $5,900 Pell Grant for 2019-20 Down from original estimate of $6,900 Increased demand, larger shortfall caused cut

12. Saturday Night Pell Fever…  Increase in Maximum EFC Eligible for Pell  Was, 95% of “appropriated amount” $4,816 for 2010-11  Now, 95% of “maximum award” $5,273 for 2010-11  Expected to reduce minimum Pell award Currently $976 (2009-2010) ED will set 2010-11 minimum “this week”  More students eligible for ACG, SMART & SEOG  Increase in Maximum EFC Eligible for Pell  Was, 95% of “appropriated amount” $4,816 for 2010-11  Now, 95% of “maximum award” $5,273 for 2010-11  Expected to reduce minimum Pell award Currently $976 (2009-2010) ED will set 2010-11 minimum “this week”  More students eligible for ACG, SMART & SEOG

13. More Specifics…  In-School Consolidation  Student must have at least TWO of: ECASLA Loan Direct Loan FFELP Loan  Available 7/1/10 – 6/30/11  College Access Challenge Grant  Funds flow to Governors  Not intended to cover default aversion, training, assistance to schools, financial literacy, etc.  In-School Consolidation  Student must have at least TWO of: ECASLA Loan Direct Loan FFELP Loan  Available 7/1/10 – 6/30/11  College Access Challenge Grant  Funds flow to Governors  Not intended to cover default aversion, training, assistance to schools, financial literacy, etc.

14. And, More Specifics  $50 Billion for DL Transition Assistance  “The Secretary shall provide institutions of higher education participating, or seeking to participate, in the [Direct] loan programs…technical assistance in establishing and administering such programs.”  Only for FY 2010  Language scaled back  Income Based Repayment Plans  Payments may be as low as 10% of borrower’s AGI  Forgiveness of remaining balance after 20 years  Effective for NEW BORROWERS as of 7/1/14  Non-Profit Servicers  Not assured to receive all loans in their state  Must meet qualifications established by Secretary  100,000 loan minimum  Allocations based on same performance criteria as used for TIVAS servicers  No new servicers admitted after 2014  $50 Billion for DL Transition Assistance  “The Secretary shall provide institutions of higher education participating, or seeking to participate, in the [Direct] loan programs…technical assistance in establishing and administering such programs.”  Only for FY 2010  Language scaled back  Income Based Repayment Plans  Payments may be as low as 10% of borrower’s AGI  Forgiveness of remaining balance after 20 years  Effective for NEW BORROWERS as of 7/1/14  Non-Profit Servicers  Not assured to receive all loans in their state  Must meet qualifications established by Secretary  100,000 loan minimum  Allocations based on same performance criteria as used for TIVAS servicers  No new servicers admitted after 2014

15. What Did the President’s FY 2011 Budget Propose?  Released February 1, 2010  Endorses SAFRA & 7/1/10 Date for 100% DL  Proposes Full Entitlement Status for Pell  Allows ACG & SMART to Expire as of 7/1/11  Moves Perkins Changes to 7/1/11  Enhances Income Based Repayment Program  10% vs 15% of discretionary income  Forgiveness after 20 years vs 25 years  Freezes Funding For Other Student Aid Programs  Released February 1, 2010  Endorses SAFRA & 7/1/10 Date for 100% DL  Proposes Full Entitlement Status for Pell  Allows ACG & SMART to Expire as of 7/1/11  Moves Perkins Changes to 7/1/11  Enhances Income Based Repayment Program  10% vs 15% of discretionary income  Forgiveness after 20 years vs 25 years  Freezes Funding For Other Student Aid Programs

16. Is There Anything Else?  Private Loan Certification  Borrower self-certification form in place  NASFAA lobbying for FAA certification  Private Loan Debt Swap  Allow conversion of SOME private loans to direct consolidation loans  Could require FAAs to retrieve COA & other aid data from past years  Limited group of borrowers get relief  Split Loans/Split Billing  Multiple programs – FFELP, ECASLA, DL  Treasury rules result in multiple payments for borrowers  Reconsolidation  Private Loan Certification  Borrower self-certification form in place  NASFAA lobbying for FAA certification  Private Loan Debt Swap  Allow conversion of SOME private loans to direct consolidation loans  Could require FAAs to retrieve COA & other aid data from past years  Limited group of borrowers get relief  Split Loans/Split Billing  Multiple programs – FFELP, ECASLA, DL  Treasury rules result in multiple payments for borrowers  Reconsolidation

17. Is There Still Time to Be Heard?  Be Specific  Be Current  Propose Solutions  Stay in Contact  Be Specific  Be Current  Propose Solutions  Stay in Contact