Fall 2008 Federal Update

Fall 2008 Federal UpdateFall 2008 Federal Update

AgendaAgenda

Budget UpdateBudget Update Legislative UpdateLegislative Update Regulatory UpdateRegulatory Update Perkins Loan IssuesPerkins Loan Issues

NSLDS ReportingNSLDS Reporting FISAP FISAP Electronic AnnouncementsElectronic Announcements

33

FY 2007 FY 2008 FY 2009*(AY 07-08) (AY 08-09) (AY 09-10)

Pell Grant $13,660,711,520 $16,256,000,000 $18,941,100,000 (Max Award) $4,310 $4,731 $4,800

FSEOG $ 770,932,800 $ 757,464,800 $ - FWS $ 980,354,430 $ 980,491,815 $ 980,500,000 Perkins $ 65,470,680 $ 64,327,222 $ - LEAP $ 64,986,570 $ 63,851,677 $ - ACG/SMART $ 850,000,000 $ 395,000,000 $ 960,000,000

* President's FY 2009 Budget Request

Program

Budget - AppropriationsBudget - Appropriations

The President's FY 2009 Request

Department of Education

2.4%

Non-Defense Discretionary

(Excludes Education)

14.1%

Social Security20.8%

Medicare13.3%

Medicaid/SCHIP7.2%

Other Mandatory11.5%

Interest on Debt8.3%

Defense22.4% $65

$417

$644

$40$224

$360

$260

$730

FY 2009 Budget PolicyFY 2009 Budget Policy

Provide for “Year-round” Pell GrantsProvide for “Year-round” Pell Grants Establish a “Lifetime Limit” for PellEstablish a “Lifetime Limit” for Pell Implement Consent-Based IRS/FAFSA Implement Consent-Based IRS/FAFSA

Data MatchingData Matching Provide Loans for Short-Term TrainingProvide Loans for Short-Term Training Modify Public Service Loan Forgiveness Modify Public Service Loan Forgiveness Eliminate the Income-Based Repayment Eliminate the Income-Based Repayment

Three-Year Interest SubsidyThree-Year Interest Subsidy Recall Federal Share of Perkins LoansRecall Federal Share of Perkins Loans

Higher Education Opportunity Act – Higher Education Opportunity Act – H.R. 4137 (Reauthorization)H.R. 4137 (Reauthorization)

July 29 – House and Senate Conferees July 29 – House and Senate Conferees approve H.R. 4137approve H.R. 4137

July 31July 31stst -- House passes H.R. 4137 by a -- House passes H.R. 4137 by a vote of 380 to 49vote of 380 to 49

July 31July 31stst -- Senate passes H.R. 4137 by a -- Senate passes H.R. 4137 by a vote of 83 to 8vote of 83 to 8

President Bush signed H.R. 4137 into law President Bush signed H.R. 4137 into law on 8/14/08on 8/14/08

HEA Reauthorization – H.R. 4137HEA Reauthorization – H.R. 4137OverviewOverview

AccreditationAccreditation Advisory Committee selected by House, Senate and Advisory Committee selected by House, Senate and

ED Secretary. No appointments until after 1/31/09.ED Secretary. No appointments until after 1/31/09. Prohibits ED Secretary from establishing criteria to Prohibits ED Secretary from establishing criteria to

assess student achievementassess student achievement

Consumer Information & DisclosureConsumer Information & Disclosure Greater transparency on college costsGreater transparency on college costs Disclosures for IHEs with preferred lender listsDisclosures for IHEs with preferred lender lists


Pell GrantsPell Grants Provides for year-round Pell GrantsProvides for year-round Pell Grants Limits eligibility to 18 semestersLimits eligibility to 18 semesters Sets EFC to $0 for students whose parent Sets EFC to $0 for students whose parent

was in Armed Forces and died in Iraq or was in Armed Forces and died in Iraq or Afghanistan after 9/11/01Afghanistan after 9/11/01

ACG/SMARTACG/SMART Technical changes on ECASLA provisionsTechnical changes on ECASLA provisions


Student LoansStudent Loans Requires ED to oversee private education Requires ED to oversee private education

loans made by FFEL lenders to students loans made by FFEL lenders to students attending Title IV institutionsattending Title IV institutions

Expands loan forgiveness if Congress Expands loan forgiveness if Congress appropriates fundsappropriates funds

Makes foreign nursing schools eligible to Makes foreign nursing schools eligible to participate in the FFEL programparticipate in the FFEL program

FAFSA SimplificationFAFSA Simplification


Maintenance of Effort (MOE) – Withholds Maintenance of Effort (MOE) – Withholds College Access Challenge Grant (old College Access Challenge Grant (old SLEAP Program) funds from States that SLEAP Program) funds from States that failed to raise spending on higher ed each failed to raise spending on higher ed each year by at least as much as they increased year by at least as much as they increased it, on average, over the last five years.it, on average, over the last five years.


Settlement of Claims Settlement of Claims Settlements for any claims exceeding $1 Settlements for any claims exceeding $1

million must be reviewed by Attorney Generalmillion must be reviewed by Attorney General New Programs and ReportsNew Programs and Reports

Over 60 new programs authorized and more Over 60 new programs authorized and more than 20 new studies must be completed than 20 new studies must be completed

HEA Reauthorization – H.R. 4137 HEA Reauthorization – H.R. 4137 Federal Perkins Loan ProgramFederal Perkins Loan Program

Amends HEA Amends HEA §428C(b)(1) to §428C(b)(1) to require require disclosures to Perkins Loan borrowers who disclosures to Perkins Loan borrowers who consolidate:consolidate: Borrower will lose all interest-free periods associated Borrower will lose all interest-free periods associated

with a Perkins Loanwith a Perkins Loan Borrower will no longer be eligible for cancellation Borrower will no longer be eligible for cancellation

benefits benefits Lender must list occupations contained in HEA Lender must list occupations contained in HEA

section 465 that qualify for cancellationsection 465 that qualify for cancellation


Amends HEA Amends HEA §463(a)(4)(B) – Secretary may §463(a)(4)(B) – Secretary may allow institutions to refer Perkins Loans to allow institutions to refer Perkins Loans to the Department for collection. Any sums the Department for collection. Any sums collected must be repaid to the institution collected must be repaid to the institution (minus collection costs) as additional FCC.(minus collection costs) as additional FCC.

Amends HEA §463(a)(9) to prohibit the Amends HEA §463(a)(9) to prohibit the Secretary from mandating assignment other Secretary from mandating assignment other than as provided in §463(a)(4) and (5).than as provided in §463(a)(4) and (5).


Amends HEA Amends HEA §464(a) to:§464(a) to: Increase annual loan limits to $5,500 for Increase annual loan limits to $5,500 for

undergraduate studentsundergraduate students Increase annual loan limits to $8,000 for Increase annual loan limits to $8,000 for

graduate/professional studentsgraduate/professional students Increase aggregate loan limits for undergraduate Increase aggregate loan limits for undergraduate

students to $27,500students to $27,500 Increase aggregate loan limits for Increase aggregate loan limits for

graduate/professional students to $60,000graduate/professional students to $60,000 Increase aggregate loan limits to $11,000 for “any Increase aggregate loan limits to $11,000 for “any

other student”other student”


Amends HEA Amends HEA §464(c)(1)(F) to require the §464(c)(1)(F) to require the Secretary to cancel a Perkins Loan if the Secretary to cancel a Perkins Loan if the borrower is:borrower is: Permanently and totally disabled Permanently and totally disabled Unable to engage in any substantial gainful activity Unable to engage in any substantial gainful activity

because of a physical or mental impairment that is because of a physical or mental impairment that is expected to result in death, has lasted for a expected to result in death, has lasted for a continuous period of not less than 60 months, or can continuous period of not less than 60 months, or can be expected to last for a continuous period of not less be expected to last for a continuous period of not less than 60 months orthan 60 months or

If the borrower is determined by the VA to If the borrower is determined by the VA to unemployable due to a service-connected disabilityunemployable due to a service-connected disability


Amends HEA Amends HEA §464(c)(1)(F) to§464(c)(1)(F) to:: Allow Secretary to develop regulations safeguarding Allow Secretary to develop regulations safeguarding

against fraud and abuse in TPD dischargesagainst fraud and abuse in TPD discharges Allow Secretary to develop regulations to resume Allow Secretary to develop regulations to resume

collection on loans discharged for TPD if the borrower collection on loans discharged for TPD if the borrower receives a new Title IV loan or earns income in receives a new Title IV loan or earns income in excess of the poverty lineexcess of the poverty line

Effective July 1, 2008Effective July 1, 2008


Amends HEA Amends HEA §464(e) to remove requirement §464(e) to remove requirement that a forbearance request be in writingthat a forbearance request be in writing

Requires terms of forbearance to be Requires terms of forbearance to be documented by confirming the agreement documented by confirming the agreement with borrower by notice and recording terms with borrower by notice and recording terms in the borrower’s file.in the borrower’s file.

Amends HEA §464(h)(1)(A) to require 9 on-Amends HEA §464(h)(1)(A) to require 9 on-time payments to successfully rehabilitate a time payments to successfully rehabilitate a defaulted Perkins Loan defaulted Perkins Loan


Amends HEA Amends HEA §465(a)(2) to extend §465(a)(2) to extend cancellation benefits to Perkins Loan cancellation benefits to Perkins Loan borrowers who are:borrowers who are: teachers in low-income educational service agencies teachers in low-income educational service agencies

(including special ed teachers)(including special ed teachers) Full-time staff in a pre-kindergarten or child care Full-time staff in a pre-kindergarten or child care

program licensed or regulated by a Stateprogram licensed or regulated by a State Full-time lawyers employed by a public defender Full-time lawyers employed by a public defender

organizationorganization Full-time fire fightersFull-time fire fighters


Amends HEA Amends HEA §465(a)(2) to extend §465(a)(2) to extend cancellation benefits to Perkins Loan cancellation benefits to Perkins Loan borrowers who are:borrowers who are: Full-time faculty members at a Tribal college or Full-time faculty members at a Tribal college or

UniversityUniversity Librarians with a Master’s degree in Library Science Librarians with a Master’s degree in Library Science

employed in a low-income school or a public library employed in a low-income school or a public library serving low-income schoolsserving low-income schools

Full-time speech language pathologists with a Full-time speech language pathologists with a Master’s degree working with low-income childrenMaster’s degree working with low-income children


Full cancellation benefits (100%) over give Full cancellation benefits (100%) over give years for members of the Armed forces years for members of the Armed forces serving in areas of hostilityserving in areas of hostility

Sense of Congress:Sense of Congress: ““The Federal Perkins Loan program is an The Federal Perkins Loan program is an

important part of Federal student aid and important part of Federal student aid and should remain a campus-based aid program should remain a campus-based aid program at colleges and Universities.”at colleges and Universities.”


Amends HEA Amends HEA §484A to require that:§484A to require that: Perkins Loans are not subject to a defense based on Perkins Loans are not subject to a defense based on

a claim of infancya claim of infancy Obligation to title IV aid does not apply to deceased Obligation to title IV aid does not apply to deceased

students, a deceased student’s estate or the estate of students, a deceased student’s estate or the estate of such student’s family.such student’s family.

Amends HEA Amends HEA §485(b)(1)(A) to expand exist §485(b)(1)(A) to expand exist counseling requirements for FFEL, Direct counseling requirements for FFEL, Direct and Perkins Loansand Perkins Loans

Ensuring Continued Access to Ensuring Continued Access to Student Loans Act (ECASLA)Student Loans Act (ECASLA)

Public Law 110-227Public Law 110-227 Enacted May 7, 2008Enacted May 7, 2008 Addresses concerns about student loan Addresses concerns about student loan

access problems created by recent access problems created by recent disruptions in credit marketsdisruptions in credit markets

Increases annual and aggregate Stafford Increases annual and aggregate Stafford Loan LimitsLoan Limits

Makes changes to the PLUS Loan & Makes changes to the PLUS Loan & ACG/SMART Grant ProgramsACG/SMART Grant Programs

ECASLA – Lender of Last ResortECASLA – Lender of Last Resort

All FFEL loan types, except Federal All FFEL loan types, except Federal Consolidation Loans, must be made under an Consolidation Loans, must be made under an LLR ProgramLLR Program

All LLR loans must be made with statutory All LLR loans must be made with statutory maximum interest rate, origination fee, and maximum interest rate, origination fee, and default feedefault fee

Secretary may designate entire schools as LLR Secretary may designate entire schools as LLR eligible through June 30, 2009eligible through June 30, 2009

GAs and lenders are prohibited from violating GAs and lenders are prohibited from violating inducement provisions or marketing LLR loans inducement provisions or marketing LLR loans

ECASLA – Loan Purchases by EDECASLA – Loan Purchases by ED

Department of Education given authority Department of Education given authority to purchase from FFEL lenders Stafford to purchase from FFEL lenders Stafford and PLUS loans first disbursed on or after and PLUS loans first disbursed on or after October 1, 2003 and before July 1, 2009October 1, 2003 and before July 1, 2009

Authority expires on July 1, 2009Authority expires on July 1, 2009 Represents temporary measure to provide Represents temporary measure to provide

capital for student loan marketcapital for student loan market

ECASLA – PLUS Loan EligibilityECASLA – PLUS Loan Eligibility

Extenuating circumstances in determining PLUS Extenuating circumstances in determining PLUS loan eligibility for parent and grad/prof student loan eligibility for parent and grad/prof student applicants during period between 1/1/007 and applicants during period between 1/1/007 and 12/31/09:12/31/09: Borrower has been or is delinquent for 180 days or Borrower has been or is delinquent for 180 days or

less on mortgage payments or medical billsless on mortgage payments or medical bills Borrower has not or is not more than 89 days Borrower has not or is not more than 89 days

delinquent on repayment of any other debtdelinquent on repayment of any other debt

ECASLA – Parent PLUS BorrowersECASLA – Parent PLUS Borrowers

PLUS Loans disbursed on or after July 1, 2008:PLUS Loans disbursed on or after July 1, 2008: Option to enter repayment either 60 days after Option to enter repayment either 60 days after

disbursement or 6 months after dependent student disbursement or 6 months after dependent student falls below half-timefalls below half-time

Accrued interest is capitalized for borrowers who do Accrued interest is capitalized for borrowers who do not delay repaymentnot delay repayment

Borrowers may repay accrued interest before entering Borrowers may repay accrued interest before entering repayment if they opt to delay repaymentrepayment if they opt to delay repayment

ECASLA – Loan LimitsECASLA – Loan Limits

Increases unsubsidized Stafford annual Increases unsubsidized Stafford annual limit by $2,000 for undergraduate limit by $2,000 for undergraduate dependent studentsdependent students

Increases additional unsubsidized Increases additional unsubsidized Stafford annual limits by $2,000 for Stafford annual limits by $2,000 for dependent students whose parents are dependent students whose parents are unable to borrow a PLUS loanunable to borrow a PLUS loan


Increases the additional unsubsidized Increases the additional unsubsidized Stafford annual limits by $2,000 for Stafford annual limits by $2,000 for independent undergraduate studentsindependent undergraduate students

Increases additional unsubsidized Increases additional unsubsidized Stafford Loan limit by $2,000 for Stafford Loan limit by $2,000 for preparatory coursework for enrollment in preparatory coursework for enrollment in undergraduate programsundergraduate programs


Increases aggregate unsubsidized loan Increases aggregate unsubsidized loan amounts for undergraduate dependent amounts for undergraduate dependent students from $23,000 to $31,000students from $23,000 to $31,000

Increases aggregate unsubsidized loan Increases aggregate unsubsidized loan amounts for undergraduate independent amounts for undergraduate independent students from $46,000 to $57,500 students from $46,000 to $57,500

ECASLA – ACT/SMART GrantsECASLA – ACT/SMART Grants

Eliminates restriction to U.S. citizensEliminates restriction to U.S. citizens Allows awards to students enrolled less than full-Allows awards to students enrolled less than full-

time but at least half-time, with proportionally time but at least half-time, with proportionally reduced maximum awardsreduced maximum awards

Requires awarding of grants and making of Requires awarding of grants and making of payments to be on the same basis as the Pell payments to be on the same basis as the Pell Grant ProgramGrant Program

Provides that awards are based on the student’s Provides that awards are based on the student’s grade level instead of academic yeargrade level instead of academic year

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2007-2008 Negotiated Rulemaking2007-2008 Negotiated Rulemaking

CCRAA ImplementationCCRAA Implementation Rules effective for 2009-2010 & Rules effective for 2009-2010 &

subsequent award years, except subsequent award years, except TEACHTEACH

Two committees establishedTwo committees established TEACH GrantTEACH Grant Loan IssuesLoan Issues


TEACH Grant NegotiationsTEACH Grant Negotiations 3 Sessions of Negotiations3 Sessions of Negotiations

January 8-10, 2008January 8-10, 2008 January 22-24, 2008January 22-24, 2008 February 6-8, 2008February 6-8, 2008

NPRM published March 21, 2008NPRM published March 21, 2008 Final Regulations published June 23, 2008Final Regulations published June 23, 2008 Negotiated Rulemaking website:Negotiated Rulemaking website:

http://www.ed.gov/policy/highered/reg/hearulemaking/http://www.ed.gov/policy/highered/reg/hearulemaking/2008/index2008.html2008/index2008.html


Loan NegotiationsLoan Negotiations 4 Sessions4 Sessions

January 14-16January 14-16 February 4-6February 4-6 March 4-6March 4-6 April 15-16April 15-16

NPRM published July 1, 2008NPRM published July 1, 2008 Final expected by November 1, 2008Final expected by November 1, 2008

TEACH GRANT PROGRAM TEACH GRANT PROGRAM SUMMARYSUMMARY

The TEACH Grant Program is a non-need based The TEACH Grant Program is a non-need based program that provides up to $4,000 per year to students program that provides up to $4,000 per year to students enrolled in an eligible program and who agree to teach enrolled in an eligible program and who agree to teach as a highly-qualified teacher in a high-need field, at a as a highly-qualified teacher in a high-need field, at a low-income elementary or secondary school for at least low-income elementary or secondary school for at least four years within eight years of completing the program four years within eight years of completing the program for which the TEACH Grant was awarded. for which the TEACH Grant was awarded.

If the Grant recipient fails to complete the required If the Grant recipient fails to complete the required teaching service, the TEACH Grant is converted to a teaching service, the TEACH Grant is converted to a Federal Direct Unsubsidized Loan with interest accruing Federal Direct Unsubsidized Loan with interest accruing from the date the grant was disbursed.from the date the grant was disbursed.

TEACH Grant Program TEACH Grant Program Final RegulationsFinal Regulations

Grants of up to:Grants of up to: $4,000 per year for 1$4,000 per year for 1stst undergraduate or post- undergraduate or post-

baccalaureate degree (up to an aggregate amount of baccalaureate degree (up to an aggregate amount of $16,000)$16,000)

$4,000 per year for graduate degree (up to aggregate $4,000 per year for graduate degree (up to aggregate amount of $8,000)amount of $8,000)

TEACH Grants are prorated for less than full-time TEACH Grants are prorated for less than full-time studentsstudents

Amount of TEACH Grants, in combination with other Amount of TEACH Grants, in combination with other assistance, may not exceed the cost of attendance.assistance, may not exceed the cost of attendance.

TEACH Grant ProgramTEACH Grant ProgramFinal RegulationsFinal Regulations

Applicants can be:Applicants can be: Undergraduate studentsUndergraduate students Graduate students pursuing a Master’sGraduate students pursuing a Master’s Students enrolled in a post-baccalaureate Students enrolled in a post-baccalaureate

teacher credential program orteacher credential program or Current or former teachers or retireesCurrent or former teachers or retirees


TEACH Grant Eligibility – All applicants must:TEACH Grant Eligibility – All applicants must: Meet requirements of 34 CFR 668, Subpart C – Meet requirements of 34 CFR 668, Subpart C –

General Provisions Student Eligibility General Provisions Student Eligibility Submit a completed FAFSASubmit a completed FAFSA Sign an Agreement to ServeSign an Agreement to Serve Enroll in a TEACH Grant-eligible institution in a Enroll in a TEACH Grant-eligible institution in a

TEACH Grant-eligible programTEACH Grant-eligible program Be completing, or intend to complete, coursework Be completing, or intend to complete, coursework

necessary to begin a career in teachingnecessary to begin a career in teaching Not have already earned a first BA or post-bacNot have already earned a first BA or post-bac


TEACH Grant Undergraduate, Post-Bac and TEACH Grant Undergraduate, Post-Bac and Graduate Student EligibilityGraduate Student Eligibility Cumulative GPA of at least 3.25Cumulative GPA of at least 3.25

• From high school for first year student or first semester of From high school for first year student or first semester of collegecollege

• From college for other students From college for other students Or above the 75Or above the 75thth percentile on one of the batteries of percentile on one of the batteries of

an admissions test, such as:an admissions test, such as:• SATSAT• ACTACT• GREGRE


TEACH Grant Eligibility for Current/ Former TEACH Grant Eligibility for Current/ Former Teachers and Retirees:Teachers and Retirees: Current teachers/retirees must have expertise in a Current teachers/retirees must have expertise in a

high-need field and be pursuing a master’s degreehigh-need field and be pursuing a master’s degree Former teachers must be pursuing a certification Former teachers must be pursuing a certification

through a high-quality alternative certification routethrough a high-quality alternative certification route Alternative certification must be offered by an Alternative certification must be offered by an

eligible institution of higher education and must be eligible institution of higher education and must be part of a Master’s degree programpart of a Master’s degree program

TEACH GRANT ProgramTEACH GRANT ProgramFinal RegulationsFinal Regulations

TEACH Grant-eligible Institutions:TEACH Grant-eligible Institutions: Must be financially responsible in accordance Must be financially responsible in accordance

with 34 CFR 668, subpart L, or an alternative with 34 CFR 668, subpart L, or an alternative standardstandard

May establish eligibility in any of 4 detailed in May establish eligibility in any of 4 detailed in Dear Colleague Letter GEN-08-07Dear Colleague Letter GEN-08-07

TEACH Grant-eligible institutions have wide TEACH Grant-eligible institutions have wide latitude to designate the TEACH Grant eligible latitude to designate the TEACH Grant eligible programs offered by the institutionprograms offered by the institution


TEACH Grant recipient must sign an TEACH Grant recipient must sign an “Agreement to Serve” that requires the “Agreement to Serve” that requires the recipient to:recipient to: Teach for four years within 8 years of Teach for four years within 8 years of

completing or ceasing enrollment in a completing or ceasing enrollment in a TEACH Grant-eligible program as a full-TEACH Grant-eligible program as a full-time highly-qualified teacher in—time highly-qualified teacher in—• A low-income elementary or secondary schoolA low-income elementary or secondary school• A high-need fieldA high-need field


High-need field –High-need field – MathematicsMathematics ScienceScience Foreign languageForeign language Bilingual educationBilingual education English language acquisitionEnglish language acquisition Special educationSpecial education Reading SpecialistReading Specialist Other high-need field documented by local, State or Other high-need field documented by local, State or

Federal governmentFederal government


If the Grant recipient fails to complete the If the Grant recipient fails to complete the required teaching service, the TEACH Grant is required teaching service, the TEACH Grant is converted to a Federal Direct Unsubsidized converted to a Federal Direct Unsubsidized Loan with interest accruing from the date the Loan with interest accruing from the date the grant was disbursed.grant was disbursed.

Grant recipient will have 30 days from the date Grant recipient will have 30 days from the date of conversion in which to pay accrued interest. of conversion in which to pay accrued interest. Otherwise interest will be capitalized as of the Otherwise interest will be capitalized as of the date of conversation.date of conversation.


A TEACH GRANT recipient whose grant has A TEACH GRANT recipient whose grant has converted to a Federal Direct Unsubsidized converted to a Federal Direct Unsubsidized Loan—Loan— Enters repayment immediatelyEnters repayment immediately Is eligible for most benefits of the Direct Loan Is eligible for most benefits of the Direct Loan

Program, including an in-school deferment andProgram, including an in-school deferment and Is not eligible for any grace periodIs not eligible for any grace period

A TEACH Grant that is converted to a loan A TEACH Grant that is converted to a loan cannot reconvert to a TEACH Grantcannot reconvert to a TEACH Grant

FINAL RULESFINAL RULESPerkins, FFEL & Direct LoansPerkins, FFEL & Direct Loans

Simplification of Deferment ProcessSimplification of Deferment Process Secretary may grant a deferment based on Secretary may grant a deferment based on

information from a FFEL holderinformation from a FFEL holder FFEL holder may grant a deferment based on FFEL holder may grant a deferment based on

information from the Secretary or another information from the Secretary or another FFEL holderFFEL holder

Perkins Loan school may grant a deferment Perkins Loan school may grant a deferment based on information from the Secretary, a based on information from the Secretary, a FFEL holder or another Perkins Loan schoolFFEL holder or another Perkins Loan school


Simplification of Deferment Process (cont.)Simplification of Deferment Process (cont.) Borrower must request deferment verbally or in Borrower must request deferment verbally or in

writingwriting Holder must grant deferment for same reason and Holder must grant deferment for same reason and

same time periodsame time period Holder must have no conflicting information on Holder must have no conflicting information on

borrower’s eligibilityborrower’s eligibility


Simplified Deferment Process (cont.)Simplified Deferment Process (cont.) Holder must grant a military deferment based Holder must grant a military deferment based

on request from borrower or borrower’s on request from borrower or borrower’s representative with supporting documentationrepresentative with supporting documentation

Holder must provide notice to borrower or Holder must provide notice to borrower or representative, if applicable, that deferment representative, if applicable, that deferment has been grantedhas been granted


Loan holders may use an accurate and Loan holders may use an accurate and complete photocopy of a Death Certificate complete photocopy of a Death Certificate to document death discharge to document death discharge

““Exceptional circumstances” discharge by Exceptional circumstances” discharge by chief executive officer based on other chief executive officer based on other reliable information unchangedreliable information unchanged


Total and Permanent Disability (TPD) Total and Permanent Disability (TPD) DischargeDischarge Title IV Loan Program regulations restructured to Title IV Loan Program regulations restructured to

follow process and clarify eligibility requirementsfollow process and clarify eligibility requirements TPD discharge application must be submitted within TPD discharge application must be submitted within

90 days of date physician certifies the form90 days of date physician certifies the form Borrower’s TPD date defined as physician’s Borrower’s TPD date defined as physician’s

certification date on the applicationcertification date on the application


TPD Discharge (cont.)TPD Discharge (cont.) Conditional discharge period is prospective starting on Conditional discharge period is prospective starting on

the date the physician certifies the borrower’s TPDthe date the physician certifies the borrower’s TPD Title IV loans or earned income received before date of Title IV loans or earned income received before date of

TPD do not disqualify borrower for dischargeTPD do not disqualify borrower for discharge Title IV loans or loan disbursements received after date Title IV loans or loan disbursements received after date

of TPD disqualify borrower for dischargeof TPD disqualify borrower for discharge


TPD Discharge (cont.)TPD Discharge (cont.) Minimal earned income allowed during Minimal earned income allowed during

conditional discharge periodconditional discharge period Loan holder must notify borrower that no Loan holder must notify borrower that no

payments are due during discharge processpayments are due during discharge process Only payments made after the TPD date Only payments made after the TPD date

(physician’s certification date) are returned upon (physician’s certification date) are returned upon receipt of final dischargereceipt of final discharge

FINAL RULESFINAL RULESFFEL & Perkins Loan ProgramFFEL & Perkins Loan Program

NSLDS Reporting RequirementsNSLDS Reporting Requirements Requires schools, lenders and GAs to report Requires schools, lenders and GAs to report

enrollment and loan status information or any enrollment and loan status information or any other Title IV loan-related information required other Title IV loan-related information required by the Secretary by a deadline established by by the Secretary by a deadline established by the Secretarythe Secretary

FINAL RULESFINAL RULESFFEL & Perkins Loan ProgramsFFEL & Perkins Loan Programs

Certification of Electronic Signatures on Certification of Electronic Signatures on MPNs Assigned to EDMPNs Assigned to ED Schools & loan holders must maintain a Schools & loan holders must maintain a

certification of creation and maintenance of E-certification of creation and maintenance of E-MPN process, including borrower authentication MPN process, including borrower authentication and signature processand signature process

E-signed MPNs must be retained for at least 3 E-signed MPNs must be retained for at least 3 years after all loans are satisfiedyears after all loans are satisfied


Certification of Electronic Signatures on MPNs Certification of Electronic Signatures on MPNs Assigned to ED (cont.)Assigned to ED (cont.) Upon Secretary’s request:Upon Secretary’s request:

• Loan holder must provide the certification and Loan holder must provide the certification and cooperate in all activities to enforce an assigned loan, cooperate in all activities to enforce an assigned loan, including provision of testimony in a legal proceedingincluding provision of testimony in a legal proceeding

FINAL RULESFINAL RULESFFEL & Perkins Loan ProgramFFEL & Perkins Loan Program

Certification of Electronic Signatures on Certification of Electronic Signatures on MPNs Assigned to ED (cont.)MPNs Assigned to ED (cont.)

Required certification must include:Required certification must include: Description of borrower’s steps to execute & Description of borrower’s steps to execute &

sign MPNsign MPN Copy of each screen as viewed by the borrower Copy of each screen as viewed by the borrower

when signing MPN electronicallywhen signing MPN electronically


Certification of Electronic Signatures on Certification of Electronic Signatures on MPNs Assigned to ED (cont.)MPNs Assigned to ED (cont.)

Required certification must include:Required certification must include: Description of process ensuring data integrity Description of process ensuring data integrity Documentation supporting loan holder’s Documentation supporting loan holder’s

authentication and electronic signature processauthentication and electronic signature process All other evidence required by EDAll other evidence required by ED


Certification of Electronic Signatures on Certification of Electronic Signatures on MPNs Assigned to ED (cont.)MPNs Assigned to ED (cont.) Loan holder must provide any records Loan holder must provide any records

requested to resolve a dispute within 10 requested to resolve a dispute within 10 business daysbusiness days

Loan holder must provide complete access to Loan holder must provide complete access to e-records until all loans made on the MPN are e-records until all loans made on the MPN are satisfiedsatisfied


Record Retention Requirements on MPNs Record Retention Requirements on MPNs Assigned to EDAssigned to ED Perkins schools must retain records showing date & Perkins schools must retain records showing date &

amount of each disbursement of loan made on MPN amount of each disbursement of loan made on MPN until the loan is satisfied.until the loan is satisfied.

Upon the Secretary request, schools must submit Upon the Secretary request, schools must submit disbursement records on assigned loans to ED.disbursement records on assigned loans to ED.

GAs must submit lender disbursement records to ED GAs must submit lender disbursement records to ED on assigned loanson assigned loans

5959

FINAL RULESFINAL RULESPerkins Loan ProgramPerkins Loan Program

Mandatory AssignmentMandatory Assignment Schools hold more than $400 million in Perkins Schools hold more than $400 million in Perkins

Loans that have been in default for 5 or more Loans that have been in default for 5 or more yearsyears

Little collection activity seen on these loans.Little collection activity seen on these loans.

ED streamlined the voluntary assignment to ED streamlined the voluntary assignment to encourage schools to assign their aged, encourage schools to assign their aged, defaulted loansdefaulted loans

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FINAL RULESFINAL RULES Perkins Loans Program Perkins Loans Program

Secretary may require assignment of a Perkins Secretary may require assignment of a Perkins Loan if—Loan if— Outstanding principal balance is $100 or more,Outstanding principal balance is $100 or more,

In default for 7 or more years, and In default for 7 or more years, and

No payment has been received in past 12 monthsNo payment has been received in past 12 months

ED will notify schools when to assign loans.ED will notify schools when to assign loans.


Definition of “Reasonable” Collection CostsDefinition of “Reasonable” Collection Costs First Collection Effort: 30% of principal, First Collection Effort: 30% of principal,

interest and late charges collectedinterest and late charges collected Second Collection Effort: 40% of principal, Second Collection Effort: 40% of principal,

interest and late charges collectedinterest and late charges collected Litigation: 40% plus court costsLitigation: 40% plus court costs


Child & Family Service CancellationChild & Family Service Cancellation To qualify for cancellation a borrower must To qualify for cancellation a borrower must

be:be: Employed full-time by a child and family service Employed full-time by a child and family service

agencyagency Provide services directly and exclusively to high-Provide services directly and exclusively to high-

risk children from low-income communitiesrisk children from low-income communities

Perkins Loan IssuesPerkins Loan Issues

Electronic Announcements:Electronic Announcements: Use of Third-Party Contractors to Perform Use of Third-Party Contractors to Perform

Perkins Loan Billing and Collection Activities – Perkins Loan Billing and Collection Activities – Posted April 24, 2008Posted April 24, 2008

Discontinuation of “Late” Late Disbursements Discontinuation of “Late” Late Disbursements – Posted July 1, 2008– Posted July 1, 2008

Changes in Assignment Procedures for Changes in Assignment Procedures for Conditional Disability Discharge – Posted July Conditional Disability Discharge – Posted July 9, 20089, 2008


FISAP-related Dear Colleague Letters:FISAP-related Dear Colleague Letters: 2007-2008 Campus-Based Reallocation Form 2007-2008 Campus-Based Reallocation Form

and process – DCL CB-08-10and process – DCL CB-08-10 FISAP Form/Instructions – DCL CB-08-09FISAP Form/Instructions – DCL CB-08-09 Edit Corrections and Perkins Cash on Hand Edit Corrections and Perkins Cash on Hand

Update Due December 15, 2008 – DCL CB-Update Due December 15, 2008 – DCL CB-07-1707-17


NSLDS Technical Updates:NSLDS Technical Updates: Temporary Relaxation of Edits for Student’s Temporary Relaxation of Edits for Student’s

Academic Level – PK –2008-04Academic Level – PK –2008-04 Reporting of a New Deferment Type Code for Reporting of a New Deferment Type Code for

Military Reservists – PK –2008-03Military Reservists – PK –2008-03 Reporting Perkins Loans to NSLDS by Reporting Perkins Loans to NSLDS by

Separate Award Year – PK-2008-02Separate Award Year – PK-2008-02

Red Flag RulesRed Flag Rules

The rules are meant to help stop identity theft The rules are meant to help stop identity theft and to prevent people from committing fraud and to prevent people from committing fraud by using stolen identities.by using stolen identities. This is different from efforts to prevent data This is different from efforts to prevent data

breaches by having adequate data security in place, breaches by having adequate data security in place, which were the subject of the 2004 set of FTC which were the subject of the 2004 set of FTC rules on the Gramm Leach Bliley lawrules on the Gramm Leach Bliley law..


Perkins Loan Schools are going to be Perkins Loan Schools are going to be considered “creditors” under the new rules and considered “creditors” under the new rules and will be covered. will be covered. schools who don’t make Perkins Loans are also schools who don’t make Perkins Loans are also

going to be considered creditors because they have going to be considered creditors because they have institutional loan programs, they accept payments institutional loan programs, they accept payments of tuition or fees over time, or they issue a debit of tuition or fees over time, or they issue a debit card to their students.card to their students.


The rules will require that the schools have in place The rules will require that the schools have in place methods to discover when a stolen identity is being methods to discover when a stolen identity is being used and to prevent the person whose identity was used and to prevent the person whose identity was stolen from being harmed, once the theft comes to the stolen from being harmed, once the theft comes to the attention of the school. attention of the school.

schools should have in place appropriate procedures schools should have in place appropriate procedures that they will follow if an ID Theft “red flag” comes that they will follow if an ID Theft “red flag” comes up, such as preventing additional charges from being up, such as preventing additional charges from being placed on an account when they are notified that it placed on an account when they are notified that it may be subject to fraud. may be subject to fraud.


http://www.nacubo.org/x10808.xmlhttp://www.nacubo.org/x10808.xml NACUBO’s memo on the Red Flag Rules.NACUBO’s memo on the Red Flag Rules.

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Questions?Questions?

Lori HartungLori HartungTodd, Bremer & Lawson, Inc.Todd, Bremer & Lawson, Inc.

[email protected]@TBandL.com

Fall 2008 Federal Update

Documents

Transcript of Fall 2008 Federal Update