HEOA Webinar Series Entrance

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HEOA Webinar Series Entrance Exit Counseling

• January 2009

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Agenda

• Where we are - HEOA
• Entrance / exit counseling changes
• Next steps
• Question and answer
• Submit via Webex at any time

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Disclaimer

• Summary information intended for informational
  purposes only
• Consult bill for details
• Not intended as legal advice or implementation
  guidance

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Resources

• Department of Education
• Reauthorization page
• http//www.ed.gov/policy/highered/leg/hea08/index.
  html
• NASFAA website
• Reauthorization page
• http//www.nasfaa.org/SubHomes/HEA/home.html
• NCHELP website
• E-library
• http//www.nchelp.org/elibrary/index.cfm?parent19
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HEOA Changes
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HEOA

• Higher Education Opportunity Act
• Reauthorization
• Public Law110-315
• Enacted August 14, 2008
• Many provisions effective upon enactment
• ED guidance
• DCL GEN-08-12
• Regulations
• notice and final rule
• negotiated rulemaking

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Changes Affecting Loan Counseling

• Entrance counseling added to statute
• HEA 485(b), DCL pg 102
• Exit counseling provisions modified
• HEA 485(l) , DCL pg 96-97
• Departmental publication of assistance programs
• HEA 485(d), DCL pg 97
• Exit counseling excluded from inducement list
• HEA 428(b)(3) 435(d)(5), DCL pg 134-135
• Entrance and exit counseling excluded from code
  of conduct gift ban
• HEA 487(e)(2)(B)(IV), DCL pg 69-71

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What This Means to You

• Lenders / guarantors can offer materials and
  technology for entrance and exit counseling
• booklets and brochures
• online counseling products
• presentation materials
• train the trainer
• Lenders / guarantors can assist with exit
  counseling
• neutral and school-controlled
• Schools must ensure entrance / exit materials
  meet the new requirements

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Entrance Counseling
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Entrance Counseling

• Counseling required at or prior to loan
  disbursement to a first-time FFEL or DL borrower
• excludes consol and parent PLUS borrower
• provide in simple understandable manner
• HEOA specifies method options
• in-person
• written form, which student must sign return
• online, which student must acknowledge
• use of interactive programs is encouraged
• test borrowers understanding

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Entrance Counseling Requirements

• HEOA creates statutory requirements (some
  partially duplicated in existing regulations)
• explanation of MPN usage
• information on NSLDS and how borrowers can access
  their own records
• likely consequences of default
• including adverse credit reports, litigation,
  Federal debt collection procedures
• reminder that obligation to fully repay loan
  applies regardless of program completion or
  completion within regular time

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Entrance Counseling Requirements

• Statutory requirements (contd)
• Sample monthly repayment amounts
• based on
• range of indebtedness levels of sub and unsub
  Stafford and, as appropriate, graduate borrowers
  with sub and unsub Stafford and Grad PLUS
• OR
• average cumulative indebtedness of borrowers in
  same program at the school

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Entrance Counseling Requirements

• Statutory requirements (contd)
• effect that accepting loan may have on other aid
  (to the extent practicable)
• information on interest accrual and
  capitalization when not paid by borr or Secy
• borrower option to pay interest while in school
  (unsub Stafford and PLUS loans)

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Entrance Counseling Requirements

• Statutory requirements (contd)
• Definition of half-time enrollment, during
  regular and summer terms (if applicable)
• include consequences of dropping below half-time
• Explanation of importance of contacting
  appropriate offices in the event of withdrawal
• so school can provide exit counseling, including
  info on repayment options and loan consolidation
• Name and contact information if borrower has
  questions about
• rights and responsibilities
• loan terms and conditions

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Exit Counseling
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Exit Counseling

• Required prior to completing course of study or
  at time of departure
• HEOA establishes single standard for FFEL and DL
  Stafford and Grad PLUS, and for Perkins loans

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Exit Counseling Requirements

• Retains existing statutory requirements
• Average monthly repayment amounts
• Review of repayment plans
• Debt management strategies designed to facilitate
  repayment
• Terms and conditions for partial cancellation

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Exit Counseling Requirements

• HEOA also adds new statutory requirements (some
  partially duplicated in existing regulations)
• repayment plans
• description of different features of each plan
• sample information showing
• average monthly payments
• difference in interest paid
• difference in total payments
• option to prepay, pay on a shorter schedule, and
  change repayment plans
• general description of tax benefits

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Exit Counseling Requirements

• Statutory requirements (contd)
• NSLDS
• availability and how it can be used to obtain
  information on loan status
• effects of loan consolidation under FFEL or DL
• effect on total interest and fees to be paid, and
  length of repayment
• effect on underlying loan benefits
• grace periods, loan forgiveness, cancellation,
  deferment
• option to prepay or change repayment plans
• fact that borrower benefits may vary by lender

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Exit Counseling Requirements

• Statutory requirements (contd)
• consequences of default
• including adverse credit reports, litigation,
  Federal debt collection procedures
• forgiveness or cancellation provisions
• general description of terms and conditions for
  full or partial forgiveness
• copy of ED information 485(d)
• forbearance
• general description of terms and conditions to
  defer payments or be granted forbearance
• copy of ED information 485(d)

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Departmental Publication

• Existing requirement 485(d)
• Specific terms and conditions under which student
  may
• obtain partial or total cancellation
• defer repayment of loans for service
• include maximum level of compensation that
  student may receive from tax-exempt organization
  to qualify for deferment
• explicitly state students may qualify for partial
  cancellation or deferments when serving as paid
  employee of tax-exempt organization

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Departmental Publication

• Existing requirements (contd)
• Includes information to enable borrowers to
  assess the practical consequences of loan
  consolidation
• differences in deferment eligibility, interest
  rates, monthly payments, and finance charges
• samples of consolidation profiles to illustrate
  such consequences

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Departmental Publication

• New requirements
• Information about various payment options
  available on student loans
• including income-sensitive and income-based
  repayment (FFEL loans)
• including income-contingent and income-based
  repayment (DL loans)
• samples of consolidation profiles to illustrate
  such consequences
• Information on forbearance
• including increase in debt resulting from
  capitalization of interest

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Departmental Publication

• New requirements
• ED required to widely publicize the location of
  information and promote its use
• No details yet provided by ED on availability

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Next Steps
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Implementation

• Entrance and exit counseling provisions effective
  August 14, 2008
• Prior regulatory requirements still apply
• in the event of conflict, statute supersedes
• Other ED guidance continues to apply
• in the event of conflict, statute supersedes
• 2008-09 FSA Handbook Volume 2, Chapter 6
• pages 2-78 thru 2-84
• ECMC chart of entrance/exit requirements
• www.ecmc.org

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Looking Ahead

• 2009 negotiated rulemaking
• 5 committees
• entrance and exit counseling scheduled for Team
  II Loans-School-based Loan Issues
• expected to commence in February
• DCL notes some topics will be incorporate through
  notice and rule (without neg reg)
• New presidency, priorities, and budget

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HEOA