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© 2014 NASFAA
Reauthorization of the Higher Education Act
Jesse O’Connell– Asst. Director for Federal RelationsNASFAA
1
The National Association of Student Financial Aid Administrators
© 2014 NASFAA 2
Reauthorizationof Higher Education Act
• Law mandates reauthorization every 5-7 years
– Higher Education Opportunity Act in 2008
• Reauthorization should occur in 2014
– Not likely
– The process has started, but there will not be a final bill
• Predictions on timing
– An automatic one-year extension was granted at the end of 2014
– Initial legislation has been released in both House and Senate, but markups are unlikely
– New Congress could mean new movement
© 2014 NASFAA 3
NASFAA’s Reauthorization Task Force
• Began work in January 2012
• Consisted of 17 members from all sectors and regions
• Forty listening sessions around the country
© 2014 NASFAA 4
Member Comments
• Needs analysis – 23%• Loans – 24%• R2T4 – 9%• Pell – 6%
© 2014 NASFAA 5
NASFAA’s Reauthorization Task Force
• Developed 60 comprehensive recommendations approved by the NASFAA Board
• Recommendations submitted to both the House and Senate Education Committees in the fall of 2013
• Document will continues to be updated, and supplemented, as the timetable for reauthorization is fluid
© 2014 NASFAA 6
RTF Spin-off Task Forces
Public Service Loan Forgiveness Task Force: Report – Jul. 2014
• Key recommendations to strengthen the PSLF program
– Forgiveness limits: 100% up to $57,500 and 50% of remainder up to $138,500 total forgiveness
– Keep untaxed
– Increase awareness
– Make data public
© 2014 NASFAA 7
RTF Spin-off Task Forces
Consumer Information Task Force: Report – Aug. 2014• Key recommendations to improve consumer information
– Eliminate annual notice and use College Navigator– Repeal student unit record ban
– Examine usefulness of campus safety and fire safety reports, etc.
– Eliminate non Title IV-related disclosures (e.g., Constitution Day, voter registration, etc.
– Exempt graduate programs from inapplicable requirements
– Require consumer testing for all new consumer information requirements
© 2014 NASFAA 8
RTF Spin-off Task Forces
Campus-Based Formula Task Force: Report – Aug. 2014
• Four recommendations to modify the campus-based aid allocation formula– Reconstruct income bands to more accurate reflect
student need
– Eliminate the base guarantee with phase-in protection
– Restructure FSEOG fair share formula to be based on Pell funding received by institution with phase-in protection
– Increase the assumed self-help for undergraduates in FWS and Perkins fair share formulas from 25% to 35% with phase-in protection
© 2014 NASFAA 9
RTF Spin-off Task Forces
Servicing Issues Task Force: Report – Feb. 2015• Focus area: Information and Communication
– Develop a central loan portal where students can manage all of their loans
– Remove servicer branding from communication with borrowers
– The Department of Education should provide standard consumer protections that are in line with other consumer financial products
– The Department of Education should permit the use of innovative technologies in order to allow servicers to more efficiently and effectively communicate with borrowers
– The regulatory requirements of entrance and exit counseling should be incorporated into ED’s Financial Awareness Counseling Tool (FACT)
• Focus area: Standardization– The Department of Education should develop a policies and procedures
manual for servicing
© 2014 NASFAA 10
RTF Spin-off Task Forces
Task forces currently working:
• R2T4
• Competency-Based Education
© 2014 NASFAA 11
Higher Education Affordability Act
• Senate Democrats’ first draft of reauthorization bill• HEAA discussion draft introduced on June 25th • Key provisions:
– PPY– Year-round Pell– Eliminates student loan origination fees– Early notification of potential financial aid packages– Streamline repayment programs: a 10-yr plan, and an
income-based plan– Borrowers more than 150 days delinquent auto-enrolled in
IBR– Full school certification of private loans– Private student loans can be discharged in bankruptcy
© 2014 NASFAA 12
FAST Act: Sens. Alexander & Bennet
• Bipartisan Financial Aid Simplification &Transparency Act• Previewed last year; officially introduced in 114th Congress • Eliminates the FAFSA
– Only asks for a student’s family size and adjusted gross income
from two years prior • Implements a one grant/one loan system• Streamlines the repayment process into two programs:
– A standard 10-year repayment and an income-based repayment
• Introduces a “look-up” table that uses family size and PPY to find the Pell Grant award amount– Provides early information to students and families
• Institutional authority to limit loans
© 2014 NASFAA 13
House GOP Reauthorization
• Released four bills:– Simplifying the Application for Student Aid Act
– Empowering Students Through Enhanced Financial Counseling Act (Passed)
– Strengthening Transparency in Higher Education Act (Passed)
– Advancing Competency Based Education Demonstration Project Act (Passed)
• These bills begin to address the committee’s four guiding principles:– Empowering students and families to make informed decisions
– Simplifying and improving student aid
– Promoting innovation, access, and completion
– Ensuring strong accountability and a limited federal role
© 2014 NASFAA 14
House GOP Reauthorization
• Simplifying the Application for Student Aid Act
– Mandates the use of PPY income in federal need analysis
– Not yet marked up
• Strengthening Transparency in Higher Education Act
– Replaces College Navigator with a new site called College
Dashboard
– ED would maintain the site, and it would have institutional
level information related to basic facts about an institution,
such as: sector, web address, enrollment, completion, costs,
financial aid, and cohort default rates
– Passed the full House
© 2014 NASFAA 15
House GOP Reauthorization
Empowering Students Through Enhanced Financial Counseling Act• Replaces one-time entrance counseling requirement with
annual counseling that must be completed before student accepts the loan
• Passive confirmation of loans would no longer be allowed
• Exit counseling is expanded to include borrower-specific information Calls for annual counseling of Pell recipients
• ED required to offer consumer-tested, on-line counseling
• Requires Parent PLUS counseling
• Passed the full House
© 2014 NASFAA 16
Other Reauthorization Marker Bills
• What is a marker bill?– Legislation that gets introduced to promote an idea or set of ideas,
but without the intent of immediate Congressional action
• Marker bills in the last Congress:– Pell Grant Protection Act (Sen. Hirono)
– Student Loan Borrower Bill of Rights (Sen. Durbin)
– Bank on Students Emergency Loan Refinancing Act (Sen. Warren)
– CHANCE Act (Sen. Landrieu)
– Simplifying Financial Aid for Students Act (Sen. Booker)
– College Affordability & Innovation Act (Sens. Murphy & Schatz)
• It’s clear that Congress is interested in student aid issues
© 2014 NASFAA 17
More Reauthorization Marker Bills
• Marker bills in this Congress:– Eliminating the Hidden Student Loan Tax Act, Rep. Davis (D-CA)
Ends origination fees
– Repay Act, Sen. Burr (R-NC) and Sen. King (I-ME) Streamline repayment plans into one 10-yr standard plan and one simplified
income-driven plan
– Bank on Students Emergency Loan Refinancing Act, Rep. Courtney (D-CT) Warren bill from last Congress
– HR 529 Expands and strengthens 529 plans, include computers and software as
qualifying educational expenses (passed full House)
• It’s clear that Congress is interested in student aid issues
© 2014 NASFAA 18
What’s Next?
• More hearings– Strengthening the Higher Education System (3/17)– NASFAA witness
• Overall timeline?• Major themes?
– Innovative Learning Models– Affordability– Access
© 2014 NASFAA 20