1 pamela moran office of postsecondary education u.s. department of education federal update federal...

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Pamela MoranOffice of Postsecondary Education

U.S. Department of Education

FederalUpdateFederalUpdate

November 5, 2007

2007 NJASFAA Fall Conference

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Agenda

• Legislation

• Recent Regulations

• Negotiated Rulemaking

• Recent Dear Colleague Letters

• Default Rates

• Conferences

• Appendices: FAFSA and FAFSA4caster,

Delivery System, and Other Announcements

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Legislation

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Legislation

• Reauthorization– Senate passed July 24, 2007– House not yet passed

• P.L. 110-93– Enacted September 30, 2007– Permanently extends the waiver authority in the

Higher Education Relief Opportunities for Students Act of 2003

• P. L. 110-84 - College Cost Reduction and Access Act (Budget Reconciliation Act)– Enacted September 27, 2007

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• Makes no changes to the ACG and National SMART Grant Programs

Legislation: CCRAAACG and National SMART Grants

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• Eliminates Federal Pell Grant “tuition sensitivity” as of July 1, 2007

Legislation: CCRAAFederal Pell Grants

Effective: July 1, 2007

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• Increases Pell Grant award by –– $ 490 for 2008-09 and 2009-10– $ 690 for 2010-11 and 2011-12– $ 1,090 for 2012-13


Effective: 2008-2009 award year

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• Increases applicable to students eligible based on the maximum award set in an appropriations act

• For 2008-09, if appropriations act sets a $4,310 maximum award, sets Scheduled Awards:– Maximum $4,800– Minimum $890

• Does not increase the number of eligible students



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• Is effective starting in 2008-2009

• Provides $4,000 for each academic year

• Has aggregate maximums– $16,000 for first baccalaureate student or

postbaccalaureate, nondegree student– $8,000 for graduate student

Legislation: CCRAA Teacher Education Assistance for

College and Higher Education (TEACH) Grants


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• Student eligibility for grant– If a current enrolled student:

• Is Title IV eligible;• Has 3.25 GPA or statutory alternatives; and• Is completing, or plans to complete, coursework

necessary to begin a career in teaching

– If a current or prospective teacher, seeking a graduate degree:

• Is a teacher or retiree with expertise in a shortage area; or

• Is or was a teacher with high quality alternative certification, e.g., Teach for America

Legislation: CCRAATEACH Grants


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• Sign agreement to serve:- Must teach at Title I school- Must teach

• Mathematics• Science• Foreign language• Bilingual education• Special education• High-need field approved by the Secretary

• Must be treated as a Direct Unsub Stafford Loan to be repaid if student does not teach

Legislation: CCRAATEACH Grants


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Legislation: CCRAACollege Access Challenge Grants

• Provides funds to States or others to be spent on efforts to increase college access

• Must be matched two to one

• $66 million for each of FY 2008 and FY 2009

Effective: October 1, 2007

13

• Income protection allowance– Modifies the way income protection

allowance is calculated and updated

• Auto-Zero and Simplified Needs Test– Adds “dislocated worker” in addition to type

of tax return and means tested benefits– Increases from 12 to 24 months for means

tested benefits– Increases Auto Zero EFC income level

from $20,000 to $30,000 (indexed)

Legislation: CCRAANeed Analysis


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• Redefines “untaxed income” by not listing:– Welfare benefits– Earned income credit amounts– Special fuel tax credit– Excluded foreign income– Untaxed social security benefits

• But retains “any other untaxed income and benefits” in listing

• Excludes additional child tax credit claimed



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• Adds to independent student definition – Is in foster care or a ward of the court at any

time when the individual is 13 years of age or older

– Is an emancipated minor or is in legal guardianship as determined by a court

– Has been verified in the year in which applying to be an unaccompanied youth who is a homeless child or youth, or is at risk of homelessness



16

• Excludes ‘special combat pay’ from income

• Provides that a qualified education benefit (529 plan) owned by dependent student is an asset of the parent

• Excludes distributions from 529 plans from estimated financial assistance



17

• Adds dislocated worker and homelessness as examples of when an FAA can use professional judgment

• Provides that an FAA can use a dependency override made by another FAA within the same award year

Legislation: CCRAAPJ and Dependency Overrides


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• Interest rates– Reduces interest rates on undergraduate

subsidized loans from 6.8 percent to 3.4 percent by 2012

– Begins reductions with loans first disbursed on or after July 1, 2008

– Beginning in 2013 the rate reverts back to 6.8 percent

• No increase in loan limits

Legislation: CCRAAFFEL and Direct Loans


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• Revises economic hardship definition

• Changed from borrower’s earnings being less than 100 percent of the poverty level for a family size of two to earnings being 150 percent of poverty level for the borrower’s family size

• Now requires that borrower must be working fulltime and is earning less than the greater of–– Federal minimum wage (annualized)– 150 percent of poverty level for borrower’s family

size



20

• Changes the current military deferment– Applies to all Title IV loans, not just loans that

were made on or after July 1, 2001– Removes three-year time limit.– Adds a 180-day period after demobilization

• Adds a new deferment for up to 13 months following end of service if borrower was in school, or was in school within 6 months, when called to active duty

• Continues qualification based on serving during a war or in a national emergency

Legislation: CCRAAPerkins, FFEL, and Direct Loans


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• Adds income-based repayment plan• Applies to Stafford, Student PLUS loans, and

Consolidation (if Consolidation does not include excepted Parent PLUS) – Borrower’s maximum annual repayment amount

is no more than 15 percent of the difference between the borrower’s AGI and 150 percent of the poverty line based on family size.

– If negative amortization, government pays interest on subsidized loans for 3 years.

– Unpaid amounts (except PLUS) are forgiven after 25 years.


Effective: July 1, 2009; conforming change, July 1, 2008

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• Public service employees loan forgiveness

• Any Direct Loan (Stafford, PLUS, Consolidation) borrowers – Is not in default – Has made 120 monthly payments– Is employed in public sector during entire

repayment period

• FFEL consolidation into Direct Loans to get benefit, but all payments in Direct Loans



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• A borrower is eligible to consolidate an FFEL Consolidation Loan into a Direct Loan to participate in the public service loan forgiveness program.



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• Reduce FFEL lender special allowance payments (SAP) by 55 basis points– 40 for nonprofit lenders

• Increase lender loan fee from 0.5 percent to 1.0 percent

• Reduce FFEL guaranty agency retention on default collections from 23 percent to 16 percent

• Reduce GA account maintenance fee from 0.1 percent to 0.06 percent


Legislation: CCRAAFFEL Lenders and GAs

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• Elimination of Exceptional Performer Designation for FFEL lenders, lender servicers, and guaranty agencies



26

• Reduce FFEL lender insurance on defaulted loans from 97 percent to 95 percent for loans first disbursed on or after October 1, 2012.



27

• Authorizes– FFEL Competitive Loan Auction Pilot – Study of auction method for the origination or

selling of student loans– Date of enactment through June 30, 2009 for

implementation

• Pilot with FFEL Parent PLUS loans for new borrowers for loans first disbursed on or after July 1, 2009

• Is State by State

Legislation: CCRAAFFEL


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Recent Regulations

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• 9/11 Survivors Discharge Final Regulations– Published September 28, 2007– Perkins, FFEL, and Direct Loans– Spouses and Parents Loans Discharged based

on death or total and permanent disability– Not clear if there are any remaining eligible

survivors: have paid off loans

Recent Final Regulations

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NegotiatedRulemaking

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Notices of proposed rulemaking (NPRM) published: Loans – June 12 ACGs and National SMART Grants – August 7 General Provisions – August 8

Final regulations by November 1, 2007

Effective dates: July 1, 2008 Possible early voluntary implementation

Negotiated Rulemaking2006-2007

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Loan

• FFEL/DL– ID theft– Entrance counseling for PLUS borrowers– Maximum length of loan period– Determination of deferment eligibility by

one loan holder

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• FFEL – Eligible lender trustee relationships– Frequency of capitalization for consolidation

loan borrowers (already in DL)– Preferred lender– Prohibited inducements

• FFEL/DL/Perkins – Use of true & exact copy of death certificate– Prospective discharge for TPD purposes

Loan

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• FFEL/Perkins– Standardize NSLDS reporting – Retention of disbursement records– Certification of E-signatures for assigned

MPNs

Loan

35

• Perkins Loan– Clarify eligibility requirements for child &

family service agency cancellation– Define “reasonable” collection costs– Mandate assignment of defaulted Perkins

Loans

Loan

36

Maximum Loan Period (FFEL and DL)– Eliminate 12-month loan period maximum– Flexibility in non-term and nonstandard

term program loan certification– Flexibility in rescheduling “stop out and

return” disbursements within allowed 180-day period

Loan

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Loan Counseling for Grad/Prof Borrowers (FFEL/DL) – Required counseling before PLUS

certification for eligible Stafford non-applicants

– Opportunity for Stafford Loan must be given before receipt of PLUS loan

Loan

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Loan Counseling for Grad/Prof Borrowers– Initial counseling required for PLUS

borrowers – Exit counseling required for Stafford/PLUS

combination borrowers

Loan

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School FFEL Loan Certification (All FFEL Schools) -

• FFEL schools may not:– Refuse/Delay certification based on choice

of lender or GA – Assign lender to first-time borrower in

award packaging or through other methods

Loan

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School FFEL Loan Certification (All FFEL Schools) -

• FFEL schools may not:– Engage in pattern or practice of

discrimination to deny FFEL access – Refuse to certify/reduce except on case-

by-case, documented basis with written reason provided to borrower

Loan

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School FFEL Preferred Lender List -

• Regulations require:– List containing minimum of 3 unaffiliated

lenders – “Unaffiliated” means no common control or

ownership; no common directors, trustees, or general partners

Loan

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• Regulations require:– School to disclose method and criteria for

lender inclusion on list – Provide comparative information on

borrower benefits offered by listed lenders (ED will provide model format)

Loan

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• Regulations require:– School to include prominent statement

advising use of of school’s preferred lender not required

– Update at least annually

Loan

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• Regulations:– Require that School not include on list a

lender that solicited and provided school or school-employee benefits

– Specify school may include lender solicited to offer best borrower benefits

Loan

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• Regulations require that school:– Not assign lender to first-time borrower – Not cause any unnecessary delays in

certification for borrowers not using a school preferred lender

Loan

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FFEL Lender Prohibited Inducements-

• Regulations forbid lender to provide, directly or through an agent, points, premiums, payments or other inducements to a school or any other party to secure FFEL applications or loan volume

Loan

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FFEL Lender Prohibited Inducements -• No payments to prospective borrowers,

including prizes and additional financial aid • No payments to schools, school-affiliated org,

or individuals to secure applications, loan volume, or placement on preferred lender list

• No service on lender advisory boards and related payments to school or school-affiliated org employees

Loan

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FFEL Lender Prohibited Inducements -• No payments to student lender reps or other

campus solicitors to secure apps from prospective borrowers

• No payment of conference or training registration, transportation, and lodging costs for school or school-affiliated org employees

• No payment of entertainment expenses for the same

Loan

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FFEL Lender Prohibited Inducements -• No philanthropic activities or payments for

FFEL applications or loan volume, or placement on preferred lender list

• No staffing services to schools except on short-term, non-recurring emergency basis, including compensated and third-party contractual services

Loan

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FFEL Lender Permitted Activities -• Assistance to schools comparable to

Secretary’s assistance to Direct Loans• Support and participation in student aid and

financial literacy outreach with schools and GAs, excluding in-person school-based counseling

• Reasonable costs of meals, refreshments, and receptions for meeting, training, or conferences if open to all attendees

Loan

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FFEL Lender Permitted Activities -• Toll-free numbers for FFEL info and school

data transmission• Reduced origination fees, reduced interest

rates, payment of federal default fees• Borrower benefits under repayment incentive

and certain loan forgiveness programs• Items of nominal value

Loan

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Guaranty Agency Prohibited and Permitted Activities -

Same as lenders, except: • Permitted to pay travel and lodging for school

service on advisory board and reasonable costs of meals and refreshments for GA-sponsored training and workshops

Loan

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• Rigorous secondary school program

• Successful completion of rigorous program

• Prior enrollment

• Academic year progression

• Determining major

• Intent to major

• Grade point average

ACG and National SMART Grant

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• Cash management

• Paying for prior-year expenses

• Student confirmation for postwithdrawal disbursement of a grant

• Certification of a loan for transfer students in nonstandard environment

General Provisions

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• Eligibility for Formula 1 if only standard terms for Pell, ACGs, and National SMART Grants– No change in eligibility for programs currently

eligible to use Formula 1

• Formula 4 payment calculations for nonterm programs for Federal Pell Grants, ACGs, and National SMART Grants

General Provisions

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RecentDear Colleague

Letters

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Dear Colleague Letters

• GEN-07-05 (September 2007)– Clarifies an institution's responsibilities to

release information under FERPA and FOIA

• GEN-07-06 (September 2007)– Revises list of eligible majors for National

SMART Grants for 07-08 – Adds additional eligible majors

• GEN-07-07 (October 2007)– Provides guidance on National SMART

Grant enrollment requirements

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Recent Dear Colleague Letters

• Expect P-07-02 – Will provide guidance on the elimination of

tuition sensitivity– Is already in effect without additional

guidance

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Default Rates

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National Student Loan Cohort Default Rates

17.2

21.4

22.4

17.8

15

11.610.7

10.49.6

8.8

6.9

5.6 5.95.4 5.2

4.55.1 4.6

0

5

10

15

20

25

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

4.6

Date issued

Per

cent

age

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Default Rates

• By sector

• For New Jersey: 5.3 percent

4.6%

3.0%

7.9%

2.4%

8.2%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

National 4-yr Public 2-yr Public Private Proprietary

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Conferences

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Fall Conferences 2007

• New Orleans– October 30 to

November 2

• San Diego– November 26 to

November 29

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Questions?

Pamela Moran(202) 502-7732

[email protected]

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Appendices

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FAFSAand FAFS4caster

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2008-2009 Paper FAFSA-General

• New Color rotation – Yellow, Orange,

Blue, Green

• Color rotation for 2008-2009 is – 159 CVU Orange

(students) – 263 CVU Purple

(parents)

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2008-2009 Paper FAFSAGeneral

• Where applicable, if the reference is beyond high school, the word “school” will be replaced with “college”

• FAFSA Questions – Question order remains the same– No new questions added– No questions deleted

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2008-2009 Paper FAFSAApplication Page 7

• Question 21: “Are you male?”– Revised to ask “Are you male or

female?”

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2008-2009 Paper FAFSAApplication Page 7

• Question 27

• Revised to be able to include home-schooling and “other”

• Notes added

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2008-2009 Paper FAFSAApplication Pages 8 and 9

• Questions 38-39 and 82-83: Revised with information moved to Notes to clarify applicability.

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2008-2009 Paper FAFSANotes Page 2

• Question 16: Instructions added to clarify correcting marital status after signing the FAFSA– Nonverifiable reject added for corrections

where “Marital Status” date is greater than application signed date

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• Question 27: Notes added to provide more answers than “yes” or “no”

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• Questions 34 and 78: “…were you eligible to file a 1040A or 1040EZ?” – Added text to emphasize that applicants

should answer “yes” if they filed a 1040, but were not required to file a tax return

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• Questions 38-39 and 82-83: Text in questions moved to Notes to clarify applicability.

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• Questions 43-45 and 87-89: “State” removed from reference to 529 prepaid tuition plans in “Investments include….”

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• Questions 71-75 and 92-96: Text added to explain that answering the five Federal means-tested benefit programs questions will not reduce student eligibility

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Redesigned 2008-2009PIN Application Process

• Real-time PINs will be issued within FOTW and the PIN Web site.

• An applicant may use only for signing FOTW.

• The application/PIN will then undergo a match with SSA.

• If the match is successful, the issued PIN becomes valid.

• If match fails, the PIN is disabled, and the ISIR/SAR is rejected. Comments added to indicate match status.

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FAFSA Printing and Delivery

• ED did not bulk mail paper FAFSAs to institutions.– Students may call 1-800-4-FEDAID to order up

to 3 paper FAFSAs.

• PDF version of the paper FAFSA is available. – Institutions can print and distribute, or– Students can complete then print, or just print.

• See Electronic Announcement dated September 13, 2007

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FAFSA4casterIntroduced in 2007-2008

• What is FAFSA4caster?

• Benefits of using the FAFSA4caster

• FAFSA4caster overview

• Completing the FAFSA4caster

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FAFSA4casterOverview

• FAFSA4caster was developed to – Foster early awareness with the financial

aid application process and form – Serve as an early analysis tool informing

college affordability – Reduce the time required to submit the

"official" financial aid application in the student's senior year

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FAFSA4casterOverview

• FAFSA4caster:– Instantly calculate eligibility for federal

student aid– Generate a FAFSA

• A FAFSA populated with student FAFSA4caster data will be available when the student is ready to file the official FAFSA for 2008-2009

– Automatically generate a Federal Student Aid PIN for use when signing the FAFSA

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www.FederalStudentAid.ed.govclick on FAFSA4caster

http://www.federalstudentaid.ed.gov/

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FAFSA4caster Overview

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FAFSA4caster Overview

Congratulations, THERESA!

FAFSA4caster has successfully calculated the information you submitted.

Below you will see an estimated Expected Family Contribution (EFC). The EFC is not the amount of money that your family must provide. Rather, you should think of the EFC as an index that colleges use to determine how much financial aid you would receive if you were to attend their school.

When you officially apply for financial aid, the colleges you list on your Free Application for Federal Student Aid (FAFSA) will determine your eligibility and then send you award information that identifies the aid they have determined you may receive. This award information will vary from college to college because the cost of attending each is different.

Your estimated EFC is 1060.

Now that we have calculated your EFC you can see what your college education may cost for attending a certain type of college in the United States. We will use your estimated EFC of 1060 and the national average for cost of attendance at each type of school.

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Estimate Award Package

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Delivery System

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2008-2009 SAR and e-SAR

• Redesign of SAR to improve usability for the student

• Printed on orange paper to match FAFSA

• 60-day and 30-day comment periods

• IFAP posting mid-summer

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Sample SAR Redesign

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Sample SAR Redesign

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2008-2009 Web ApplicationsPIN Web site

• Spanish version of the PIN Web site will be implemented

• Real-time e-mails generated for duplicate PIN requests

• ‘Check PIN Status’ will be enhanced to indicate when an application has been submitted and is in process

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2008-2009 New PIN Application Process

• New PIN application process will be implemented to make signing the FAFSA (FOTW) easier– Can apply for a PIN within FOTW or from the PIN

Web site– PINs will be issued in real time

• Choose their own PIN• Have a system-generated PIN display on the web page• Receive a system-generated PIN by e-mail

– SAR comments will be added to indicate the PIN match status

• Successful match – PIN and signature are valid• Unsuccessful match – PIN and signature are not valid

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2008-2009 New for FAFSA on the Web (FOTW)

• New Spanish FOTW web site will be available– An option to be redirected to the Spanish

version of FOTW will be available from the FOTW home page

• New Spanish output documents will be available– SAR Acknowledgements, SARs and e-SARs

will be sent if Spanish application was submitted

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2008-2009 FOTW Home Page Enhancements

• Dependency worksheet function will be added to the FOTW home page, will assist students to know:– Their dependency status before starting

the FAFSA application– If they need their parents’ information or

not for the FAFSA application

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2008-2009 FOTW Home Page Enhancements

• Only one option to select for completing an application type– The option to select the appropriate

application type will be presented after login

• Home page links will be more distinct for easier viewing and usability

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2008-2009 FOTW Application Entry Enhancements

• Some questions will be re-ordered to ease application completion and to improve flow and usability

• Additional skip logic will be added– Students who are Auto Zero-eligible will be

able to skip the student income questions

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2008-2009 FOTW Application Entry Enhancements

• Up-front signature process removed from FOTW– The new PIN process will allow students and

parents to sign immediately without leaving the application

• Parental information transfer process enhanced– Parental data will be transferable between

different application types (i.e. FAFSA to Renewal FAFSA)

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2008-2009 FOTW Applications Changes

• The Signature section will contain new PIN application function– Allows for receiving a new PIN and signing without

leaving the application session

• Text on confirmation page will inform the applicant of Pell Grant eligibility– Dynamic text will indicate whether or not student is

eligible for Pell Grant

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2008-2009 FOTW Processing Enhancements

• Students with Dependency Overrides will be Renewal eligible– Students will be able to proceed with

Renewal if they are determined to be independent

– Students who are determined to be dependent will be prompted to contact their Financial Aid Office for assistance

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2008-2009 FOTW Processing Enhancements

• Unofficial EFC will be calculated for ISIRS rejected only due to missing signature– EFC will display on the ISIR– EFC will not display on the SAR or in FAA

Access to CPS Online– Transaction will be flagged with a “C” code– Signature required prior to disbursement

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2008-09 Edit Changes

• New Reject 4– Non-verifiable reject (with an FAA-only

override) if Marital Status Date is greater than date the application was signed

• New Reject 20– Non-verifiable reject (with an FAA-only

override) for non-filers whose income exceeds IRS requirements for filing a federal tax return

103

2008-09 Edit Changes

• Added a warning edit for applicants whose tax filing status is “Will File” and they are correcting one of the following fields:– AGI– Earned Income– Taxes Paid– Exemptions

• New edit will require applicants to re-answer the question

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2008-09 ISIR Changes

• Unofficial EFC will be calculated for records with signature only rejects (14, 15 and/or 16)– Records will be rejected with no official

EFC calculated– Signature required to resolve reject– Signature Reject EFC field added to ISIR

for use by state agencies and schools

105

2008-09 ISIR Changes

• NSLDS Data Elements added– “PX” added for new “Identity Theft Discharged” loan

status code– COD Grant sequence numbers added to Pell data– “Fraud Loan Flag” added

• NSLDS Data Elements added/changed for ACG and National SMART Grant

• Scheduled Award• % Eligibility Used by Scheduled Award • Total % Eligibility Used by Academic Year• Award Year• “School Year” label changed to “Academic Year Level”

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Other Announcements

107

Electronic Announcements

• Updated guidance for accurately reporting verification status codes to COD on September 24– Includes details of Verification Status Report

• Updated ACG Rigorous Programs for 2007 graduates on September 24– Includes updated and expanded resource

guide

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Note for DL Schools Reporting to COD

• For 2008-09 COD record MUST include dependency status code before disbursement record will be accepted

• There will be a new field for unsubsidized loans to indicate the reason for the unsubsidized loan– i.e. HEAL, dependent student PJ

• Must be a signed MPN for record to be accepted

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Upcoming Training

• Fundamentals of Title IV Administration– Majority of seats for schools new to Title IV– Available in each Regional Office

• Financial Aid Basics– See ANN-07-01– For new FAA’s at participating schools– 5 Nationwide in 2007

• Schedules for FY 08 in each region and registration available now!

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Upcoming Training

• Spring Training Series– Live in person sessions– To cover the new regs and new

legislative provisions– Watch for upcoming announcements

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Live Instructor Led Internet Training

• Available for registration now!– Applicant Data Resolution Training

• See ANN-07-03• Resolving application data rejects• Using on-line functions to correct errors• Last session Oct. 24

112

Instructor Led Internet Training

• Available for registration now!– NSLDS Overview

• ANN-07-13

– NSLDS Aggregate Loan Calculations• ANN-07-14

– EFC Calculations• ANN-07-15

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Other Training

• Links on training site (TFAP) to recorded live sessions or Computer Based Training (CBT)– FSA Coach– COD CBT– EDExpress Basics– FISAP– R2T4 web software recorded training– FSA Assessments

• http://www.ed.gov/offices/OSFAP/training/index.html

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Other Training

• Available on the QA Training site– What’s New With the ISIR Analysis Tool– Creating a Flat ASCII File and Uploading

Records– Getting Started in the Quality Assurance

Program– 2007-08 FSA Assessments

• http://ifap.ed.gov/qahome/training.html

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