Federal Update MASFAP Conference March 10, 2006. National Student Loan Cohort Default Rates National...

Federal Update

MASFAP Conference

March 10, 2006

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

4.5

0

5

10

15

20

25

1988 1991 1994 1997 2000 2003

National Student Loan Cohort Default RatesNational Student Loan Cohort Default Rates

4.5

Per

cent

age

Issued date: 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

National Student Loan Cohort Default RatesNational Student Loan Cohort Default Rates

Default Rate by SectorDefault Rate by Sector

School Type FY 2001 FY 2002 FY 2003

Public – 2 Year 8.5% 8.5% 7.6%

Public – 4 Year 4.4% 4.0% 3.3%

Private – 2 Year 6.8% 6.1% 6.6%

Private – 4 Year 3.3% 3.1% 2.6%

Proprietary 9.0% 8.7% 7.3%

Foreign 2.3% 2.0% 1.8%

National Rate 5.4% 5.2% 4.5%

National Student Loan Default RatesNational Student Loan Default Rates

Missouri Default Rates(FY 2001 - FY 2003)

FY 2001 FY 2002 FY 2003

Rate 4.8% 3.8% 3.1%

Borrowers in 62,201Repayment

Borrowers inDefault 1,971

# of Schools 167

0

1,000,000

2,000,000

3,000,000

4,000,000

2005-06 2006-07

That’s a 5.6% increaseThat’s a 5.6% increase

Application Volumes Through Processing Week 10

•3,235,7063,235,706 2006-07 FAFSAs processed as of March 5, 2006

•3,053,2293,053,2292005-06 FAFSAs processed as of March 5, 2005

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

Paper Electronic

2005-06 2006-07

91.3% of 2005-2006 FAFSAs filed electronically!91.3% of 2005-2006 FAFSAs filed electronically!96.3% of 2006-2007 FAFSAs filed electronically!96.3% of 2006-2007 FAFSAs filed electronically!

Paper vs. Electronic Filers Through Processing Week 9

FAFSA on the Web Worksheet

• ED seal added for more “official” look

• Reformatted for ease of use

• Instructions embedded throughout the form

• Includes checklist of documents needed

• State deadlines listed

FAFSA on the Webwww.fafsa.ed.gov

• Apply• Reapply• English and Spanish

options• Access PIN Web site• Check status of

application• View SAR information• Make Corrections

Corrections on the Web

• Corrections on the Web not processed in real-time if new school code added– Non-real time

corrections matched with NSLDS data

– Resulting ISIR will have most recent NSLDS data

The PIN Web Site

Improved PIN Home Page

www.pin.ed.gov --• Re-ordered main

menu options so those most frequently used are listed first

• Added fly-over text to describe menu items

http://www.pin.ed.gov/

FAA Access to CPS Online

• Enter and submit FAFSA and Renewal FAFSA data

• View students SAR information

• Correct applicant data• Calculate verification

tolerances• Calculate estimated taxes

paid• Request ISIRs from Datamart

fafsa.ed.gov/FOTWWebApp/faa/faa.jspfafsa.ed.gov/FOTWWebApp/faa/faa.jsp

Hurricane Relief

Hurricane Relief

$95 million to Louisiana to support most higher education programs

$95 million to Mississippi for student aid

$10 million for schools that enrolled displaced students

Re-allocated Campus-Based Funds to Affected Schools

Hurricane Relief

Announcements # 12 and # 9 Waiver of Responsibility to Return

Funds33 Designated Hurricane Affected

Schools Only

Announcements #? And #? Title IV aid disbursed in Fall 2005 for

students attending affected schools will be discharged or cancelled.

Final FY 2006 Appropriations

• Public Law 109-148 – Department of Defense Appropriations Act, 2006

– 1% Government-wide Reduction of FY 2006 Discretionary Appropriations

• Public Law 109-149 – Departments of Labor, HHS, and Education, and Related Agencies Appropriations Act, 2006

FY 2006 Program Budgets(dollars in thousands)

Award Year President's Final2005-06 Request Appropriation

Pell Grant $ 12,364,997 $ 13,652,000 $ 13,045,230 (Max Award) $4,050 $4,150 $4,050

(Shortfall) $ - $ 4,300,821 $ 4,300,000

FSEOG $ 778,720 $ 778,720 $ 770,933

FWS $ 990,257 $ 990,257 $ 980,354

Perkins $ - $ - $ - (Cancellations) $ 66,132 $ - $ 65,471

LEAP $ 65,643 $ - $ 64,987 Math/Science $ 50,000

Program

* Includes shortfall

* *

FY 2007 Budget Request

Appropriations

FY 2005 FY 2006 FY 2007*(AY 05-06) (AY 06-07) (AY 07-08)

Pell Grant $12,364,997,280 $13,045,230,000 $12,738,770,000 (Max Award) $4,050 $4,050 $4,050

FSEOG $ 778,720,000 $ 770,932,800 $ 770,932,800

FWS $ 990,257,056 $ 980,354,485 $ 980,354,485

Perkins $ 66,131,680 $ 65,470,363 $ -

LEAP $ 65,643,000 $ 64,987,000 $ -

Acad Comp& SMART $ - $ 790,000,000 $ 850,000,000

Program

* President's FY 2007 Budget Submission


Aid AvailableFY 2006 FY 2007*

(AY 06-07) (AY 07-08)Pell Grant $ 12,745,900,000 $ 12,986,000,000 (Max Award) $4,050 $4,050

FSEOG $ 975,900,000 $ 975,900,000 FWS $ 1,172,000,000 $ 1,172,000,000 Perkins $ 1,135,000,000 $ 133,000,000 LEAP $ 165,000,000 $ - AC/SMART $ 790,000,000 $ 850,000,000 Loans $ 60,577,000,000 $ 66,082,000,000 TOTAL $ 77,560,800,000 $ 82,198,900,000

Program

* President's FY 2007 Budget Submission


Federal Pell Grant Program

• Maximum award for 2007-2008 remains at $4,050

• Year-round Pell Grants• Eligibility limited to equivalent of 16

semesters• Tuition sensitivity award rule

eliminated


Campus-Based Programs

• No changes for FSEOG and FWS programs

• Perkins Loan Program– No funding for FCC or for loan

cancellations– Recall Federal portion of loan

repayments


FFEL and Direct LoansNo changes for Loan Programs

– See Higher Education Reconciliation Act

Other ProgramsNo funding requested for—

– LEAP– GEAR UP– Upward Bound– Talent Search– Byrd Honors Scholarship

Higher Education Reconciliation Act Deficit Reduction Act of 2005—S. 1932

• Conference Report passed the House on December 19, 2005

• Conference Report passed the Senate on December 22, 2005 in slightly different form

• House passed Senate version on February 1, 2006

• President signed into law February 8, 2006

Higher Education Reconciliation Act

Creates Two New Grant Programs• Academic Competitiveness Grant

Program (ACG)

• National “Science and Mathematics Access to Retain Talent (National SMART Grant)” Grant Program

Both programs are funded and will be operational for the 2006-2007 award year.


Creates Two New Grant ProgramsBoth ACG and SMART Require Student to

be –

• U.S. Citizens – No Eligible Non-Citizens

• Enrolled Fulltime

• Pell Grant Recipients


Academic Competitiveness Grant (ACG)• First and second year students enrolled in a

degree granting institution• Not been previously enrolled in a program

of undergraduate education

• Have completed a rigorous secondary school program of study

• For second year students have at least a 3.0 GPA

• $750 – first year $1,300 – second year


National SMART Grant

• Third and fourth year students enrolled in a degree granting institution

• Majoring in science, technology, math, or certain designated foreign languages

• Have at least a 3.0 GPA in the major

• $4,000 for each year

INST./PROGRAM ELIGIBILITY

Amend 50% Rule: Excludes telecommunication courses from the so-called 50 percent rules related to distance correspondence study. (Effective 7/1/06)

Changes in Definition of Academic Year Changes the definitions of "academic year"

to mean at least 30 weeks of instruction for a program measured in credit hours and at least 26 weeks for a program that measures progress in clock hours. (Effective 7/1/06)


Recognition Programs of Distance Education Provides that a program offered in whole or in part through telecommunications is an eligible program if it has been specifically approved by its accrediting agency that is recognized by the Secretary and has distanced education in its scope. (Effective 7/1/06)


Programs Using Assessment to Measure Progress: Provides that a program that measures progress by direct assessment of students is an eligible program if the assessment is consistent with the institution’s accrediting agency. (Effective: 7/1/06)

Short-Term Telecommunications Programs: Eliminates the requirement that a certificate program offered through telecommunications must be one year or longer in order for it to not be considered a correspondence course (and therefore ineligible for Title IV assistance). (Effective 7/1/06)

FFEL and Direct Loans

Active Duty Military Deferment: Provides for a military deferment of up to three years for the FFEL, Direct Loan, and Federal Perkins Loans that were first disbursed on or after July 1, 2001. Includes definitions of terms used in the deferment. (Effective for any loan made on or after July 1, 2001)


Increase Loan Limits in FFEL and Direct Loan: Increases annual loan limits for first year students from $2,625 to $3,500 and for second year students from $3,500 to $4,500. Increases annual unsubsidized loan limit for graduate students from $10,000 to $12,000. Aggregate loan limits would not be changed. (Effective 7/1/07)


EXTENDS PLUS Eligibility to Graduate Students: Extends eligibility for PLUS Loans to graduate and professional students. All eligibility criteria remain including credit checks and no in-school status. However, student would be eligible for an in-school deferment. (Effective 7/1/06)


Loan Rehabilitation: Provides that the number of on-time payments required to rehabilitate a loan would be reduced from 12 to 9 made within 20 days of the due date during 10 consecutive months.


Extends Teacher Loan Forgiveness from Teacher-Taxpayer Act: Permanently and retroactively extends the authorization of the increased loan forgiveness of $17,500 for "highly qualified" math, science, and special education teachers at qualified low-income schools. (Effective on date of enactment, retroactive to October 1, 2005)


Reinstate Low-Default Disbursement Rule Waivers: Reinstates two provisions that expired on October 1, 2002, relating to loan disbursements. An institution with cohort default rates of less than 10 percent for the three most recent fiscal years would be exempted from the requirement that FFELs or Direct Loans be issued in at least two separate disbursements for one term loans and from the 30-day delay requirement for first time students. (Effective on Date of Enactment)


Standardize Repayment Plans on FFEL Model: Provides that the standard, graduated, and extended repayment plans in the Direct Loan Program be comparable to the same repayment plans in the FFEL Program. Maintains differences between FFEL’s Income Sensitive Repayment Plan and Direct Loan’s Income Contingent Repayment Plan. (Effective 7/1/06)


Increases the scheduled NEW FFEL PLUS Loan fixed interest rate for new loans made on or after July 1, 2006 from 7.9 to 8.5 percent. Direct PLUS loans will remain at a fixed rate of 7.9 percent.

NOTE: New Stafford rates for new loans in both programs will be fixed at 6.8 percent for loans made on or after 7/1/06.


Borrower Origination Fees: Phases out the 3 percent FFEL origination fee by July 1, 2010, and reduces the Direct Loan loan fee (which represents both an origination fee and a 1 percent insurance premium) to 1 percent by the same date.

Require Collection of 1 Percent Guaranty Fee: Requires that the one percent GA default fee be deposited into the Federal fund. Requires the agency to either deduct from loan proceeds or pay with other non-Federal sources. (Effective 7/1/2006)


CONSOLIDATION LOANS• Generally no re-consolidation

– Applies within and across programs

• FFEL Loans to Direct only if FFEL application denied

• Eliminates In-School Consolidations in Direct Loans and “Early Conversion to Repayments” Consolidations in FFELP

• Eliminates Joint ConsolidationsEffective 7/1/06

FFEL

SCHOOL LENDERS• No new school lenders after April 1,

2006• Can only make Staffords to Grad/Prof• Must use proceeds for grant aid• Must offer reduced interest or fees

FFEL

FFEL LENDERS and Guaranty Agencies

• Reduces Payments

• Adds Fees

• Other Requirements

FFEL

FFEL GUARANTY AGENCIESCollege Access Initiative Provides

that each guaranty agency must work with the Secretary to gather and publicize college access information.

COST OF ATTENDQNCE

Cost of Attendance For Less Than Half-Time Students

Cost of attendance for less than half-time students to include room and board costs. However, a less than half-time student could only receive the room and board allowance for up to three semesters (or the equivalent) and no more than 2 of those semesters may be consecutive. (Effective 7/1/06)

COST OF ATTENDQNCE

Inclusion of Costs for Obtaining Professional Credential in Cost of

AttendanceGives institution the option of including the one-time cost of obtaining the first professional credentials in the cost of attendance for a student in a program requiring professional licensure or certification. (Effective 7/1/06)

CALCULATION OF EFC SIMPLIEFIED NEEDS TEST AND AUTO ZERO

EFC• Increases the threshold under which a

family would be automatically considered to have an EFC of zero to $20,000. (Effective 7/1/06)

• Alternative for parents or students that benefit under a Federal means-tested program, such as supplemental security income, food stamp, free and reduced priced school lunch, TANF, and special supplemental nutrition programs. (Effective 7/1/06)

CALCULATION OF EFC

• Adds active duty military to the criteria that makes a student independent. (Effective 7/1/06)

• Changes how 529 Tuition Savings Plans are treated (Effective 7/1/06)

• Excludes small-businesses from assets (Effective 7/1/06)

• Changes to Income Protection Allowances. (Effective 7/1/07)

• Changes to Asset Assessment Rates (Effective 7/1/07)

STUDENT ELIGIBIITY

DRUG CONVICTION

Provides that an applicant loses eligibility for Title IV aid only if the drug related offense for which he or she was convicted occurred while the student was receiving Title IV aid. (Effective 7/1/06)

RETURN OF TITLE IV AID (R2T4)

• Excludes LEAP/SLEAP • Clarifies that multiple leaves of absence

are permitted• Specifies that scheduled clock hours are

used to determine earned aid• Provides that a student does not have to

repay grant overpayments of $50 or less• Requires institution to contact a student

prior to making a late or post-withdrawal disbursement of loan funds

RETURN OF TITLE IV AID (R2T4)

• Requires institution to return funds no later than 45 days after the date that it determines the student has withdrawn.

• Limits a grant overpayment due from a student to the amount by which the original overpayment amount exceeds half of the total grant funds received by the student.

Tax Rules – Generally non-taxable Not part of AGI Reported on 1040s for purposes of EITC

EFC Calculation Rules – Always include as part of income earned from

work Tax filers, include as untaxed income on

Worksheet B Non tax filers, do not include on Worksheet B

Will be picked up when income earned from work is used instead of AGI

Treatment of Combat Pay

NEW – Documentation Can Include: Direct access by the school to real-time data

from the holder’s database. This includes real-time access using third party software or products. Must ensure that access is to source data and

not to data stored by third party. Must ensure that data is current and clearly

identifies the defaulted loans or overpayments and the current status of those loans or overpayments.

Print Screen with full details

Resolving Defaults, etc.

When NSLDS cannot account for full balance of a consolidation loan.

Usually – Capitalized Interest Perkins Loan Health Professions PLUS Non Title IV loan Ineligible loan Spouse’s loans Loan not cleared by lender yet Missing loan

Unallocated Amounts

NSLDS will not use ‘unallocated’ amounts when determining if an applicant has exceeded or is close to a loan limit.

Schools can ignore ‘unallocated amounts’ that are reported on ISIRs and on NSLDS Web Screens.

ISIRs and web screens will still report unallocated amounts.

See NSLDS Newsletter

Unallocated Amounts

Thank You

Federal Update MASFAP Conference March 10, 2006. National Student Loan Cohort Default Rates National...

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