Federal Update

1
Federal Update

• KASFAA Spring Conference
• Bowling Green, Kentucky
• April 11-13, 2007
• Presented by Greg Martin

2
2007-08 Pell Grant Payment Schedules

• Maximum award is 4,310
• Minimum award remains 400
• Maximum Pell eligible EFC is 4110
• Published in DCL P-07-01

3
Direct Grad-PLUS Loan Deferments

• Direct PLUS loans for grad./professional students
  will be placed into in-school deferment status
  based on enrollment reporting information
• Students continuing at least ½ time enrollment
  automatically receive in-school deferments that
  remain in effect until completion date reported
  by school

4
Preferred Lenders

• Preferred Lenders Lists are allowed
• No Automatic Referrals
• Must process any loan request made by a student
  or parent regardless of lender
• See GEN-07-01
• May not have unreasonable delays
• Publications, scripts and staff training should
  comply
• Violations could bring sanctions
• Does not apply to FFEL/Direct Loan choice

5
Preferred Lenders

• Preferred Lenders Lists are allowed
• No Automatic Referrals
• Must process any loan request made by a student
  or parent regardless of lender
• See GEN-07-01
• May not have unreasonable delays
• Publications, scripts and staff training should
  comply
• Violations could bring sanctions
• Does not apply to FFEL/Direct Loan choice

6
Alternative Loans

• Alternative loans must be included as estimated
  financial assistance if enrollment is a
  condition for the loan
• Does not matter where loan proceeds are sent or
  whether school certified enrollment
• May replace EFC
• Think about it like an outside scholarship

7
Training Opportunities

• Spring Training (ACG/SMART Grant)
• West Virginia State University, Institute, WV
  (Charleston area)
• May 9, 2007
• Tennessee Tech University, Cookeville, TN
• June 5, 2007
• Univ. of Southern Indiana, Evansville, IN
• April 18, 2007
• Refer to DCL ANN-07-04 for information and a link
  to the registration site

8
Training Opportunities

• R2T4 software training
• On-line, instructor-led
• Includes changes to the R2T4 calculation
  resulting from HERA
• 90 minute sessions
• Refer to DCL ANN-07-02 for registration
  information

9
Training Opportunities

• Applicant data resolution training
• On-line, instructor led
• Resolving student application data rejects and
  use Departments web-based systems to correct
  errors
• 90 minute sessions
• Refer to DCL ANN-07-03 for registration
  information

10
Negotiated Rulemaking

• Four negotiating teams
• Loans
• ACG/National SMART
• General Provisions
• Accreditation

11
Negotiated Rulemaking Loan Issues

• Entrance counseling for Grad PLUS
• Identity theft
• Use of preferred lenders
• Prohibited inducements
• Economic hardship
• Retention of disbursement records supporting MPNs

12
Negotiated Rulemaking Loan Issues

• Certification of E-signatures on MPNs assigned to
  ED
• Use of true and exact copy of death certificates
  for death discharge
• Retroactive discharge for permanent ant totally
  disabled borrowers
• Lender NSLDS reporting timeframes

13
Negotiated Rulemaking Perkins Loan Issues

• Assignment of defaulted loans
• Eligibility requirements for child and family
  service cancellation
• Definition of reasonable and affordable
  collection costs

14
Negotiated Rulemaking ACG/National SMART

• Rigorous secondary school programs
• Who defines rigor?
• Mandatory school participation in ACG/National
  SMART
• Requirement that Pell Grants and ACG/National
  SMART be disbursed at the same institution when
  awarded in the same term
• Academic year progression

15
Negotiated Rulemaking ACG/National SMART

• Grade point average
• Transfer students coursework timing of
  calculation eligibility for disbursement
• Interpretation of previously enrolled
• College credits earned while in high school
  treatment of AP/IB credits
• Clarify meaning of successful completion of
  rigorous program of study means
• ED monitoring disbursements of student awards by
  academic year

16
Negotiated Rulemaking General Provisions

• Consistent enrollment status definitions for all
  Title IV programs
• Consistent definitions of undergraduate and
  graduate student for all Title IV programs
• Define independent study
• Treatment of FFEL and DL funds when a student
  withdraws before beginning class make
  consistent with other programs
• Eliminate the single disbursement requirement for
  Perkins and FSEOG

17
Negotiated Rulemaking General Provisions

• Nonstandard term and nonterm programs
• Use of completion of half the weeks of
  instructional time for timing of loan
  disbursements loan eligibility for nonstandard
  term programs Require institutions to use
  consistent disbursement periods
• Cash Management
• Recovery of stale dated checks student/parent
  permission for electronic disbursements
  Affirmative confirmation of a loan
• Eliminate requirement for written notification
  and student confirmation of a post-withdrawal
  disbursement of a grant made directly to student

18
Negotiated Rulemaking General Provisions

• Allow standard term programs with monthly starts
  to use Pell Formula 1
• Eliminate double pro ration for Pell Grant
  payments for clock and credit hour programs w/o
  terms
• Pro rate loans for remaining portion of a program
  by standard 50 instead of exact ratio
• Allow school to credit students account for
  minor prior year charges w/o authorization
• Allow school to certify a loan for a transfer
  student for remaining portion of loan not used a
  first school and then certify a new loan for the
  new academic year

19
Negotiate Rulemaking Accreditation

• Due Process
• Substantive change
• Monitoring
• Measures of student achievement
• Transfer of credit/acceptance of credentials
• Definition of terms direct assessment

20
Negotiated Rulemaking Information

• IFAP under Law Regulation select
  2006-2007Negotiated Rulemaking for Higher
  Education
• Select by team e.g., Accreditation Team
• Obtain list of negotiators, draft agenda, summary
  of sessions
• Print proposed regulatory language
• Informative heads-up as to what MAY be coming

21
Tentative Calendar

• Sessions December 2006, February, March and
  April 2007
• NPRM June 2007
• 60-day comment period
• Final rules November 1, 2007
• Effective date June 1, 2008 with possible early
  implementation

22
Fiscal Year 2008 Budget Proposals
23
FY 08 Title IV Budget Priorities

• Federal Pell Grant
• Increase maximum Pell Grant to 4,600 for
  2008-09 and to 5,400 by 2012-13.
• Pell Grants available year-round at eligible 2
  year and 4 year degree granting institutions
• Pell Grant eligibility limited to the equivalent
  of 16 semesters
• Eliminate the Pell Grant award rule related to
  tuition sensitivity

24
FY 08 Title IV Budget Priorities

• ACG and National SMART Grants
• Increase Academic Competitiveness Grants (ACG)
  awards from
• 750 to 1,125 for first-year students
• 1,300 to 1,950 for second-year students

25
FY 08 Title IV Budget Priorities

• Eligibility/EFC
• Exclude amounts held by students and parents in
  529 savings and investment accounts from the EFC
  formula
• Implement a consent-based approach to matching
  FAFSA data with Federal tax data
• Lots more do be worked out
• Pilot first
• ??? Award Year

26
FY 08 Title IV Budget Priorities

• FFEL/Direct Loans
• Increase annual loan limits for upper division
  undergraduates from 5,500 to 7,500
• Increase aggregate loan limits for all students
• No amounts specified

27
FY 08 Title IV Budget Priorities

• Funding for Increased Aid
• Eliminate new funding for
• FSEOG
• Perkins Loan
• LEAP
• Recall Federal share of Perkins Loan revolving
  fund and outstanding loan portfolio.
• Details being evaluated

28
FY 08 Title IV Budget Priorities

• Funding for Increased Aid
• lender fee from 0.5 percent to 1 percent Reduce
  interest subsidies to lenders by 0.5 percent (50
  basis points)
• Reduce default insurance from 97 percent to 95
  percent
• Reduce guaranty agency default collection
  payments
• Move guaranty agency account maintenance fees to
  a unit cost basis
• Increase consolidation.

29
FAFSA4caster!!!

• Announcing FAFSA4caster
• Tool to help HS Juniors and their families
  prepare for college
• Available April 1
• Visit www.FederalStudentAid.ed.gov
• See Electronic Announcement on March 21

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(No Transcript)
32
Higher Education Reconciliation Act
of2005(HERA)
33
FFEL and Direct Loans

• Loan limits in FFEL and Direct Loans annual base
  limits increased for - -
• First year students from 2,625 to 3,500
• Second year students from 3,500 to 4,500
• Increases annual additional unsub for - -
• Graduate students from 10,000 to 12,000
• Prep for grad program from 5,000 to 7,000
• Teacher certification from 5,000 to 7,000
• Aggregate limits are not changed
• Effective for loans first disbursed on or after
  July 1, 2007

34
Calculation of EFC 2006-2007

• Simplified Needs Test and Auto Zero EFC
• Increases to 20,000 the threshold under which a
  family would automatically have an EFC of zero
• Eliminates consideration of dependent students
  tax return for both SNT and Auto-Zero EFC

35
Calculation of EFC 2006-07

• Simplified Needs Test and Auto Zero EFC
• Tax return alternative for parents or students
  that received, during the base year, benefits
  from a Federal means-tested program such as
  supplemental security income, food stamps, free
  an reduced school lunch, TANF and WIC

36
Calculation of EFC 2006-07

• Active Duty Military
• Adds active duty military to the criteria that
  makes a student independent
• Action Dependency Override
• 529 Tuition Savings Plans
• Treats all 529 Pre-Paid and Tuition Savings Plans
  as assets of the owner, unless the owner is the
  dependent student
• Action Update assets / do not include as EFA
• Small Businesses
• Excludes small-businesses from assets
• Action Update Assets

37
Calculation of EFC 2007-2008

• Income Protection Allowance
• Dependent student increased to 3,000
• Independent students w/o dependents other than a
  spouse increased to 6,050
• Applies to single student and married student
  with both spouses enrolled
• Independent Students w/o dependents other than a
  spouse increased to 9,700
• Applies to a married student where only one
  spouse is enrolled
• Independent students with dependents other than a
  spouse IPA table increased by 5 for 2007-2008

38
Calculation of EFC 2007-2008

• Asset assessment rates decreased
• Independent students w/o dependents other than a
  spouse
• Reduces asset contribution rate from 35 to 20
• Independent students with dependents other than a
  spouse
• Reduces asset contribution from 12 to 7
• Dependent students
• Reduces asset contribution from 35 to 20

39
New Grant Programs

• Academic Competitiveness Grant (ACG)
• National Science and mathematics to Retain Talent
  Grant (National SMART Grant)

40
Authorization and Funding

• Funding for these programs is not subject to the
  annual appropriations process
• 2006-07 790 million
• 2007-08 850 million
• 2008-09 920 million
• 2009-10 960 million
• 2010-11 1.01 billion

41
Rules and Regulations

• Interim Final Regulations for the 2006-07 award
  year published on July 3, 2006
• Invitation to comment through August 17, 2006 for
  possible changes for 2007-08
• Received 80 comments
• Final Regulations for the 2007-2008 award year
  and beyond published on November 1, 2006
• Institutions may implement changes made in the
  Final Regulation for the 2006-2007 award year

42
Rules and Regulations

• One Significant Change
• July 3 interim rule required student to have
  received a Pell Grant in the same payment period
  (e.g., term) to receive an ACG or National SMART
  Grant
• November 1 final rule requires student to have
  received a Pell Grant sometime in the same award
  year to receive an ACG or National SMART Grant

43
Institutional Responsibility

• Institutions are responsible for implementing the
  new programs within the guidance provided
• The Secretary recognizes that institutions face
  significant challenges in implementing the
  programs with almost no lead time for the 2006-07
  award year
• These facts will be considered during reviews of
  the institutions implementation of the programs

44
Programs Are Similar in Some Ways
Student Eligibility
U.S. Citizen Only Eligible Non-Citizens Do Not Qualify
Pell Grant Recipient During Same Award Year
Full-time Enrollment for Payment Period
Enrolled in Degree Program
Progression by Student Academic Year
Only One Scheduled Award for Each Academic Year
45
ACG National SMART
1st 2nd academic years of a two or four year degree program. 3rd 4th academic years of a four year degree program.
Requires completion of rigorous high school program of study. Requires student to be in a designated major.
1st Academic Year- 7502ndAcademic Year- 1300 3rd Academic Year- 4000 4th Academic Year- 4,000
GPA of at least 3.0 as of the end of 1st academic year only. GPA of at least 3.0 at each disbursement.
46

• Duration of Student Eligibility
• For ACG, students are restricted to
• One grant for the students first academic year.
• One grant for the students second academic year.
• For National SMART Grant, students are restricted
  to
• One grant for each of the students third and
  fourth academic years.

47

• ACG Eligibility Requirements
• 1st year students
• May not have been previously enrolled while in
  high school as a regular student in an ACG
  eligible program.
• Have completed a rigorous secondary school
  program of study after January 1, 2006.
• 2nd year students
• Have completed a rigorous secondary school
  program of study after January 1, 2005.
• Have a 3.0 or higher GPA at the end of 1st year.

48
ACG Options for Rigorous Program

• State Designated Program
• State Submitted Program.
• An advanced or honors program established by a
  state and in existence for the 2004-2005 or
  2005-2006 school year.
• State Scholars Initiative (SSI) Programs.

49
ACG Options for Rigorous Program

• A set of courses as outlined in the final
  regulations.
• Completion of at least two Advanced Placement
  (AP) courses with passing test score of 3 or two
  International Baccalaureate (IB) courses with
  passing test score of 4.

50
ACG Options for Rigorous Program

• Set of Courses
• 4 years of English.
• 3 years of math
• Two of which must be algebra I and above.
• 3 years of science
• Two of which must be biology, chemistry, or
  physics.
• 3 years of social studies.
• 1 year of a language other than English.

51
ACG Documenting Rigorous Program

• Institutions are responsible for determining the
  eligibility of students who self-identified on at
  least the standard(s) selected by the student.
• Institutions are encouraged to identify all
  eligible students based on records they have
  (e.g., high school transcripts, test scores).
• Institutions are also responsible for determining
  eligibility if student informs the institution
  directly.

52
ACG Documenting Rigorous Program

• Documentation from cognizant authority.
• For home schooled students, the parent or
  guardian is the cognizant authority.
• For transfer students, an institution may rely on
  another schools determination that student
  completed a rigorous program.
• NSLDS will store the data.

53
ACG Grade Point Average

• For second academic year, student must have a
  cumulative Grade Point Average (GPA) of at least
  3.0 from the first academic year.
• GPA determined one time, after completion of
  first academic year.
• For a student who transfers after completing
  first academic year, the new institution must
  calculate GPA using the grades from all
  coursework accepted from prior schools.

54
National SMART Grant Major Fields of Study

• Computer Science
• Engineering
• Technology
• Life Sciences

• Mathematics
• Physical Sciences
• Designated Critical Foreign Languages

Identified by CIP code in DCLs GEN-06-06 and
GEN-06-15 Classification of Instructional
Program
55
National SMART Grant Major Fields of Study

• Requires that a recipient
• Declare an eligible major or
• Show intent to declare eligible major if school
  policy does not yet allow a major to be declared.
• Institution must have a process for monitoring
  that student is making progress toward completion
  of the program with that eligible major.

56
National SMART Grant Grade Point Average

• For each payment period, a student must have a
  cumulative grade point average (GPA) of at least
  3.0 that
• Includes all coursework required for degree in
  approved major.
• Is calculated through last completed payment
  period.
• Is reviewed prior to each disbursement.

57

• Both Programs
• Need-Based Grants
• Total of ACG/National SMART Grant, EFC, Pell, and
  all estimated financial aid cannot exceed cost of
  attendance.
• ACG and National SMART Grant may not replace EFC
  in need equation.
• To avoid an overaward, an institution may reduce
  other aid, including FSEOG, or it may reduce the
  ACG or National SMART Grant.

58

• Both Programs
• Determining Enrollment Status
• Schools must have the same policy for determining
  enrollment status for Pell Grants and for ACGs
  and National SMART Grants.
• Schools must use same recalculation policy, such
  as recalculation date (census date), that is used
  for Pell Grants.

59

• Both Programs
• Academic Year
• Students progress and duration of eligibility in
  an eligible program is measured in Title IV
  academic years. A Title IV academic year is
  defined in the HEA to be
• A minimum of either
• Twenty-four semester credit hours, or
• Thirty-six quarter credit hours, or
• 900 clock hours.
• --AND
• A minimum of 30 weeks of instructional time (26
  weeks for clock hour programs).

60

• Second and Fourth Academic Year
• For the 2006-2007 and 2007-2008 Award Years
• For a student enrolled in an associates degree
  program, the second academic year ends when the
  student has completed the program.
• For a student enrolled in a bachelors degree
  program, the fourth academic year ends when the
  student has completed the program.
• See DCL GEN-06-18

61
For the 2006-2007 and 2007-2008 award years, an
institution with a 30 week academic year and
standard terms ( Formula 1) may
Academic Year - Weeks of Instruction

• Determine the actual number of weeks of
  instructional time that were included for the
  student to complete the number of credit hours in
  the institutions Title IV academic year
  definition.

• Assume that there were 30 weeks of instructional
  time for each increment of credit hours that
  comprises the institutions Title IV academic
  year definition.

- OR -
62

• Academic Year Weeks of Instruction
• May exercise option
• On a student by student basis.
• For same student for different terms.
• For transfer credits differently than for home
  earned credits.
• NOTE An institution must determine the actual
  number of weeks of instructional time for a
  student who requests that such a determination be
  made or questions whether he or she has completed
  an academic year.See DCL GEN-06-18

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Comments regarding these materials ormy
performance should be directed to Jo Ann
Borel202-377-3930 Joann.borel_at_ed.gov