Seeking Opportunities & Meeting Challenges – A Washington Update

MASFAA Annual ConferenceMay 23, 2013

Brett Lief, Inceptia

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Current State of Play

© 2013 Inceptia

What are the goals of the Administration?

What is Congress up to?

What this all means beyond the beltway?

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• FY14 Budget Proposals

Administration

Today** 2016*** 2018****

Current Law

Subsidized Stafford3.4

(6.8 beginning 7/1/13) 6.8 6.8

Unsubsidized Stafford 6.8 6.8 6.8

PLUS 7.9 7.9 7.9

President's Proposal: Student Loans

Subsidized Stafford (10yr T-bill + 0.93) 2.63 5.23 6.13

Unsubsidized Stafford (10yr T-bill + 2.93) 4.63 7.23 8.13 PLUS (10yr T-bill + 3.93) 5.63 8.23 9.23

© 2013 Inceptia

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• New Direct Perkins Loan• Funding increased $1 billion to $8 billion• 2000 additional schools• No school involvement in repayment or collection• Closeout of existing portfolio

• Pell Grant Increase• Add $140 to current level = $5,785

• Campus-based Funding Formula Change• Reward schools serving high-need students and setting

responsible tuition policies

• Federal Work Study - Additional $150 million• SEOG Continued Funding

Budget Proposals

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• Pell • No change 2012-13 and 2013-14

• FSEOG/FWS• No change 2012-13, awards reduced 2013-14

• Direct Loan fees • Increased 1.0% to 1.051%

• Direct Loan PLUS • Increased 4.0% to 4.204%

• Changes to non-profit direct loan servicers

Sequestration – Major Provisions

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• Begin September 2013• Fraud Prevention & Detection• Gainful Employment• Cash Management• State Authorization• Clock to Credit Hour Conversion• Campus Safety and Security• PLUS Loan & Adverse Credit• Other Items Determined by Negotiators

Proposed Regulatory Rulemaking

© 2013 Inceptia

WHAT IS CONGRESS UP TO?

Student Loan Interest Rate

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Congressional Interest Rate ProposalsToday** 2016*** 2018****

Coburn-Burr-Alexander Proposal (10yr T-bill + 3%)

All federal loans 4.7 7.3 8.2

Kline Proposal 

All Stafford Loans(10yr T-bill + 2.5%, adjusted annually, capped at 8.5%)

4.2 6.8 7.7

PLUS(10yr T-bill + 4.5%, adjusted annually, capped at 10.5%)

6.2 8.8 9.7

Petri Proposal (Loan payment capped at 15% of income, interest capped at 50% of original balance,

eliminates subsidies and forgiveness programs)Reed-Durbin-Tierney-Courtney

(91day T-bill + factor annually set by Department based on program cost)

Subsidized Stafford  (91day T-bill + ED set factor, capped at 6.8%)Unsubsidized Stafford & Parent PLUS (91day T-bill + ED set factor, capped at 8.25%)

Warren Proposal (Set rates on new Stafford loans at Fed discount window rate (0.75%) for one year)

© 2013 Inceptia

WHAT DOES IT MEAN BEYOND THE BELTWAY

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Our institution is fine

We are okay – it’s the other

schoolsOh crap…

Three Stages of School Awareness

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NOTHING IS NEW

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In the Beginning

• Society benefited from educated workforce

• Grants provided access, Loans provided choice

• Role of government was to stand behind student

© 2013 Inceptia

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HOW THINGS HAVE CHANGED

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In the Beginning

• Society benefited from educated workforce

• Grants provided access, Loans provided choice

• Role of government was to stand behind student

© 2013 Inceptia

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How Things Have Changed

• Belief that individuals, not society, benefit from postsecondary education and training

• Loans provide both access and choice• Government is positioning itself between

students and schools• Additional school accountability

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Additional Accountability:You are Being Watched…

• Special Audit Services – Improper Payments Elimination and Recovery Act of 2010

• Consumer Financial Protection Bureau• Financial Aid “Shopping

Sheet”

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Funding for needy

studentsAdditional

institutional funding

Perception of Who Benefits

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WHAT IS NEXT?

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Change is Here

• Data driven• State cooperation• Analysis of programs

serving today’s generation

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Rebalance

AccessAffordabilityAccountabilityAusterity

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“The strength of the United States is not the gold at Fort Knox or the weapons of mass

destruction that we have, but the sum total of the education and the character of our people.”

Senator Claiborne Pell (D-RI)

© 2013 Inceptia

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QUESTIONS

CONTACT INFORMATIONBrett Lief

brettl@Inceptia.org