New Era of Accountability

Diane Auer JonesAssistant Secretary for

Postsecondary EducationU.S. Department of Education

2

Restoring Confidence

• Federal Student Aid Programs• Borrower Benefits/Choice• Transparency• Compliance

• Financial Aid Administrators• FFEL Lenders and Guarantee Agencies• Department of Education

3

College Attendance Rates

U n d ergrad u ate E n ro llm en t b y A tten d an ce S ta tu s1986-2016

Sou rce: U .S . D epartm ent o f E du cation

0

2 ,0 0 0 ,0 0 0

4 ,0 0 0 ,0 0 0

6 ,0 0 0 ,0 0 0

8 ,0 0 0 ,0 0 0

1 0 ,0 0 0 ,0 0 0

1 2 ,0 0 0 ,0 0 0

8 5 -8 6

8 8 9 0 9 2 9 4 9 6 9 8 0 0 0 2 0 4 0 6 0 8 1 0 1 2 1 4 1 5 -1 6

Full-time Part-Time

5,618,000

9,009,000

5,094,000

7,169,000

6,259,000

10,333,000

4,271,000

6,348,000

4

College Prices

InstitutionalType

AverageCost

1996-97

Average Cost

2006-07

Increase over past 10 years,

%

Increase 2005/6 to 2006/7, $

Increase in 2005/6 to 2006/7, %

2 yearPublic

$1,465 $2,272 55% $90 4%

4 year TF

Public$2,975

$7,142

$5,836

$12,796

96%

79%

$344

$681

6%

6%

4 year TF

Private$12,994

$18,357

$22,218

$30,367

71%

65%

$1,238

$1,624

6%

6%

TF

TFRB

TFRB

T (tuition); F (fees); R (room); B (board)Source: College Board

5

Helping Students MakeInformed Choices• FAFSA4Caster• College Navigator

• FIPSE Student Achievement and Institutional Performance Pilot Project•AAC&U, ASCU, & NASULGC

6

Federal Student AidTOTAL PELL GRANT EXPENDITURES

$0

$2,000,000,000

$4,000,000,000

$6,000,000,000

$8,000,000,000

$10,000,000,000

$12,000,000,000

$14,000,000,000

$16,000,000,000

1987

-198

8

1988

-198

9

1989

-199

0

1990

-199

1

1991

-992

1992

-199

3

1993

-199

4

1994

-199

5

1995

-199

6

1996

-199

7

1997

-199

8

1998

-199

9

1999

-200

0

2000

-200

1

2001

-200

2

2002

-200

3

2003

-200

4

2004

-200

5

2005

-200

6

2006

-200

7 *

2007

-200

8 *

2008

-200

9 *

* Estimate

7

Pell Grant Maximum Awards2000-2012

Fiscal Year Award Year Authorized Appropriated

2000 2000-01 $4,800 $3,3002001 2001-02 $5,100 $3,7502002 2002-03 $5,400 $4,0002003 2003-04 $5,800 $4,0502004 2004-05 $5,800 $4,0502005 2005-06 $5,800 $4,0502006 2006-07 $5,800 $4,0502007 2007-08 $5,800 $4,3102008 2008-09 -------- + $4902009 2009-10 -------- + $4902010 2010-11 -------- + $6902011 2011-12 -------- + $6902012 2012-13 -------- +1,090

8

Academic Competitiveness GrantsPell Grant Eligible Enrolled Full-Time & U.S. Citizen

Rigorous Secondary School Program of Study• Recognized State-submitted programs; or• Courses similar to State Scholars Initiative; or • 2 AP Courses with test score of 3 or better; or• 2 IB Courses with test score of 4 or better

Award Size: $750/$1300

2006: $233,038,410 awarded to 299,089 students

http://www.ed.gov/admins/finaid/about/ac-smart/state-programs06.html

http://www.ed.gov/admins/finaid/about/ac-smart/2007/state-programs-07.html

9

Academic Competitiveness GrantsInnovative Strategies to Identify Eligible Students:

• Institutions and states can establish a branded core curriculum for college admissions.

• Example: The University of California’s A-G coursework requirements for Admissions are well-known by high schools students throughout the State and constitute an ACG-approved course of study.

• The state can certify AC Grant eligibility by sending to postsecondary institutions reports listing eligible students.

• Example: Students in the State of Florida who have completed the ACG-approved curriculum are eligible to receive the Bright Futures Scholarship. Florida sends universities the names of Bright Futures recipients.

• Institutions can reach out to all Pell Grant recipients, not just students who self-identify as eligible.

• Example: Brigham Young University, Idaho, contacted all students who self-certified on their FAFSA as well as other students who appeared to be potentially eligible based on a review of transcripts and financial aid records.

10

National SMART Grants

Eligibility: Pell Grant Eligible Enrolled Full-Time & U.S. Citizen 3rd and 4th year college students enrolled in and making progress toward a degree in STEM or Critical Needs Foreign Language; GPA 3.0 or better.

Award Size: $40002006 - $195,544,735 awarded to 60,976 students

ChangesAdditional SMART Majors added Enrollment requirements clarified

11

Institutional AidInstitutional Aid by Academic Year

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

1996-1997

1997-1998

1998-1999

1999-2000

2000-2001

2001-2002

2002-2003

2003-2004

2004-2005

2005-2006

2006-2007

Academic Year

Am

ou

nt

$ thousands

12

State AidState Aid by Academic Year

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

$8,000,000

$9,000,000

1996-1997 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007

Academic Year

Am

ou

nt

$ thousands

13

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

$180,000

Without consolidations With consolidations

Federal Student Loan Volume(FFEL & Direct Loans)

$ millions

14

Average Federal Student Loan Debt

Undergraduate students with a 4-Year Degree (Percent of students borrowing)

$0

$2,000

$4,000$6,000

$8,000

$10,000

$12,000

$14,000$16,000

$18,000

$20,000

1993 1996 2000 2004

66%62%

58%

40%

15

Average Federal Student Loan Debt Cumulative Amount of Student Loans by Percentiles for Graduating Seniors

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

1992-93 1995-96 1999-2000 2003-04

10th 50th 75th 90th

Monthly Payment$207

Monthly Payment$411

16

Student Loans• Stafford/Unsubsidized Stafford/PLUS• Direct Loans/FFEL

• Competition yields better borrower benefits• Private Loans

• Fill gap above Federal Student Loan limits• Should not displace grant aid or Federal loans• Marketing Practices• Dept. of Education - Interagency Group• Ombudsman

• 877-557-2575 (borrowers) • 202-377-3800 (Financial aid professionals)

Presenter Name(s)

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

National Student Loan Cohort DefaultNational Student Loan Cohort Default RatesRates

Per

cent

age

18

Ripped from the Headlines

Lenders Misusing Student DatabaseImproper Searches Raise Privacy Fears

Swimming With Student Loan Sharks

University named in report detailing student loan abuse

Rules proposed to curb loan abuse

Panel Finds Wide Abuse in Student Loan Program

19

ComplianceDear Colleague Letters

Negotiated Rulemaking – Began in 2006

Publication of Final Rule – Nov. 1, 2007

College Cost Reduction & Access Act

Changes Affecting FFEL Lenders and Guaranty Agencies

•Effective October 1, 2007 --• Reduced:

• FFEL guaranty agency retention percentage from 23% to 16%.

• FFEL lender special allowance payments (SAP) by 55 basis points (40 for non-profit lenders).

• GA account maintenance fee from .10% to .06% • Increased lender loan fee from .50% to 1.0%.• Eliminated Exceptional Performer Designation for FFEL

lenders, servicers, and guaranty agencies.

Increased Pell Grants

TEACH Grants*

Loan Forgiveness for Public Service Employees*

PLUS Auction Pilot

College Access Challenge Grants

College Cost Reduction & Access Act

* - Requires negotiated rulemaking

College Cost Reduction & Access Act

Negotiated Rulemaking

Regional Hearings:

11/2 (LA); 11/14 (DC); 11/29 (CA)

Nominations: November 29, 2007

Target Dates:

• TEACH: Publication (6/1/08) and Implementation (7/1/08*)

• FULL PACKAGE: Publication (11/1/08) and Implementation (7/1/09)

HEA

Reauthorization?

Thank you!