Changing Times of Alphabet Changing Times of Alphabet Soup:Soup:

Updates on the Acts and Regulations from Updates on the Acts and Regulations from Washington, DCWashington, DC

Speakers: Speakers:

Members of the MASFAA Members of the MASFAA Government Relations CommitteeGovernment Relations Committee

College Cost Reduction College Cost Reduction and Access Act (CCRAA)and Access Act (CCRAA)

• Important News from Washington!Important News from Washington!

CCRAA…CCRAA…

Budget reconciliation measureBudget reconciliation measure

Signed into law September 27, 2007

Pell GrantsPell GrantsSecs. 101, 102(a) and 102(b)Secs. 101, 102(a) and 102(b)

• Eliminates tuition sensitivity effective Eliminates tuition sensitivity effective July 1, 2007 (see P-07-02)July 1, 2007 (see P-07-02)

• Increases the maximum authorized Increases the maximum authorized amount: amount: $4,800 for award years 2008-2009 and 2009-$4,800 for award years 2008-2009 and 2009-

2010 (increase of $4900);2010 (increase of $4900);$5,000 for award years 2010-2011 and 2011-$5,000 for award years 2010-2011 and 2011-

2012 (increases of $690);2012 (increases of $690);$5,400 for the 2012-2013 award year $5,400 for the 2012-2013 award year

(increase of $1,090).(increase of $1,090).

Teacher Education Assistance for Teacher Education Assistance for College and Higher Education College and Higher Education

(TEACH) Grants(TEACH) GrantsSec. 104Sec. 104

• New grant program for current or New grant program for current or prospective teachers attending eligible prospective teachers attending eligible institutions, effective July 1, 2008institutions, effective July 1, 2008

• Grants may be made up to $4,000 per Grants may be made up to $4,000 per academic yearacademic year$16,000 maximum for undergraduate degree$16,000 maximum for undergraduate degree

or post-baccalaureate programor post-baccalaureate program$8,000 maximum for master’s degree$8,000 maximum for master’s degree

TEACH EligibilityTEACH Eligibility

• Minimum GPA of 3.25 on a zero to 4.0 scale; orMinimum GPA of 3.25 on a zero to 4.0 scale; or• Scored above theScored above the 75th percentile on at least one of the 75th percentile on at least one of the

undergraduate, post-baccalaureate, or graduate school undergraduate, post-baccalaureate, or graduate school admission testsadmission tests

ANDAND

• (for bachelor’s degree or post-baccalaureate program) (for bachelor’s degree or post-baccalaureate program) completing or plans to complete coursework and other completing or plans to complete coursework and other requirements necessary to begin a career in teachingrequirements necessary to begin a career in teaching

• (for master’s degree) is a teacher or retiree from another (for master’s degree) is a teacher or retiree from another occupation with expertise in a field in which there is a occupation with expertise in a field in which there is a shortage of teachers, or is or was a teacher using high-shortage of teachers, or is or was a teacher using high-quality alternative certification routesquality alternative certification routes

TEACH Recipient ObligationsTEACH Recipient Obligations

• Applicant must serve as a full-time “highly Applicant must serve as a full-time “highly qualified” teacher for at least 4 academic years qualified” teacher for at least 4 academic years within 8 years after completing education; within 8 years after completing education;

• Teach in a public or other qualified nonprofit Teach in a public or other qualified nonprofit private elementary or secondary school; andprivate elementary or secondary school; and

• Teach in a high-need fieldTeach in a high-need field

OR ELSE…OR ELSE…

• The TEACH Grant(s) are converted to The TEACH Grant(s) are converted to unsubsidized Direct Loan(s)unsubsidized Direct Loan(s)

College Access Challenge Grant College Access Challenge Grant ProgramProgram

Sec. 801Sec. 801

• New 2-to-1 matching grant program for New 2-to-1 matching grant program for States and qualifying philanthropic States and qualifying philanthropic organizations in each of the fiscal years organizations in each of the fiscal years 2008 and 2009 2008 and 2009

• Postsecondary education information and career Postsecondary education information and career preparation for students and familiespreparation for students and families

• Instruction and education on postsecondary education Instruction and education on postsecondary education financing options that promote financial literacy and financing options that promote financial literacy and debt managementdebt management

• Assistance in completing the FAFSA or other common Assistance in completing the FAFSA or other common formsforms

• Need-based grant aid for studentsNeed-based grant aid for students• Professional development for guidance counselors at Professional development for guidance counselors at

middle and secondary schools, and financial aid middle and secondary schools, and financial aid administrators and college admissions counselors at administrators and college admissions counselors at institutions of higher education to help give student institutions of higher education to help give student better guidance on how to prepare for and navigate better guidance on how to prepare for and navigate through collegethrough college

Challenge-supported activities include:

Need AnalysisNeed AnalysisSec.104Sec.104

• Sets specific increases in the student Income Protection Sets specific increases in the student Income Protection Allowance (IPA) for years 2009-2013Allowance (IPA) for years 2009-2013

Applies to dependent and independent studentsApplies to dependent and independent students After 2012-2013, IPA is thereafter tied to the After 2012-2013, IPA is thereafter tied to the

Consumer Price IndexConsumer Price Index Parent IPA is linked to the Consumer Price Index as Parent IPA is linked to the Consumer Price Index as

of 2009-2010of 2009-2010

• Expands eligibility for the Simplified Needs Test and the Expands eligibility for the Simplified Needs Test and the Automatic Zero EFCAutomatic Zero EFC

• Eliminates consideration of certain untaxed incomeEliminates consideration of certain untaxed income

Loan Deferment ChangesLoan Deferment Changes

• Economic hardship DefermentEconomic hardship Deferment• Military deferment Military deferment

Economic Hardship DefermentEconomic Hardship DefermentSec. 304(a)Sec. 304(a)

• Changes from 100% of the poverty line for Changes from 100% of the poverty line for a family of two to 150% of the poverty line a family of two to 150% of the poverty line depending on borrower’s family sizedepending on borrower’s family size

• No debt burden criterion for the defermentNo debt burden criterion for the deferment• Effective Date: October 1, 2007Effective Date: October 1, 2007

Military DefermentMilitary DefermentSecs. 202, 204Secs. 202, 204

• Available to FFELP, Direct and Perkins Available to FFELP, Direct and Perkins borrowers regardless of disbursement borrowers regardless of disbursement datedate

• 3-year limit on military deferment removed3-year limit on military deferment removed• Deferment extended 180 days following Deferment extended 180 days following

demobilizationdemobilization• Effective Date: October 1, 2007Effective Date: October 1, 2007

Repayment ImplicationsRepayment Implications

• Public Service Loan ForgivenessPublic Service Loan Forgiveness• Stafford Loan Interest rate ReductionStafford Loan Interest rate Reduction• Income-based repayment PlanIncome-based repayment Plan

Public Service Loan ForgivenessPublic Service Loan ForgivenessSecs. 203, 401Secs. 203, 401

• Balance of interest and principal canceled after Balance of interest and principal canceled after 10 years10 years

Not in DefaultNot in Default Borrowers in public service during which they have Borrowers in public service during which they have

made 120 monthly payments in Direct Lending made 120 monthly payments in Direct Lending ( (FFELP borrowers must consolidate into DL - any payments made in FFELP would not count)

Borrowers must still be in public service at the time ofBorrowers must still be in public service at the time of loan cancellation loan cancellation

Eligible under income-based, standard, or incomeEligible under income-based, standard, or income contingent repayment plans contingent repayment plans

Public Service?Public Service?• Public service jobs include:Public service jobs include:

full-time jobs in public emergency management, full-time jobs in public emergency management, government, public safety, public law enforcement, government, public safety, public law enforcement, public health, public education, public early childhood public health, public education, public early childhood education, public child care, social work in a public education, public child care, social work in a public child or family service agency, public services for child or family service agency, public services for individuals with disabilities, public services for the individuals with disabilities, public services for the elderly, public interest legal services (including elderly, public interest legal services (including prosecution or public defense), public library services, prosecution or public defense), public library services, public school library sciences, other public school-public school library sciences, other public school-based services or a tax exempt organization under based services or a tax exempt organization under 501(c)(3), or teaching as a full-time faculty member of 501(c)(3), or teaching as a full-time faculty member of a Tribal College or University or other faculty teaching a Tribal College or University or other faculty teaching in high-needs areas as determined by ED.in high-needs areas as determined by ED.

• Effective Date: payments made after October 1, 2007Effective Date: payments made after October 1, 2007

Stafford Loan Interest rate Stafford Loan Interest rate ReductionReduction

Sec. 201(a)Sec. 201(a)

• Phased-in rate reduction for undergraduate Phased-in rate reduction for undergraduate subsidized Stafford Loans (FFELP and Direct) subsidized Stafford Loans (FFELP and Direct) from 6.8 % to 3.4% over 4 yearsfrom 6.8 % to 3.4% over 4 years 6.0% on or after July 1, 2008 and before July 1, 20096.0% on or after July 1, 2008 and before July 1, 2009 5.6% on or after July 1, 2009 and before July 1, 20105.6% on or after July 1, 2009 and before July 1, 2010 4.5% on or after July 1, 2010 and before July 1, 4.5% on or after July 1, 2010 and before July 1,

2001120011 3.4% on or after July 1, 2011 and before July 1, 20123.4% on or after July 1, 2011 and before July 1, 2012

Income-Based Repayment PlanIncome-Based Repayment Plan“Partial Financial Hardship”“Partial Financial Hardship”

Sec. 203Sec. 203

• Borrower can request that payments do Borrower can request that payments do not exceed…not exceed…15 percent of difference between borrower’s 15 percent of difference between borrower’s

AGI and 150 percent of the poverty line for AGI and 150 percent of the poverty line for her/his family size, divided by 12 her/his family size, divided by 12

Parent PLUS borrowers are not eligible for Parent PLUS borrowers are not eligible for this plan, including borrowers with this plan, including borrowers with consolidation loans that have underlying consolidation loans that have underlying parent PLUS loansparent PLUS loans

Income-based repayment PlanIncome-based repayment Plan“Partial Financial Hardship” cont.“Partial Financial Hardship” cont.

• Other terms of the Plan:Other terms of the Plan: Borrower’s eligibility evaluated annuallyBorrower’s eligibility evaluated annually Education Department pays interest on Education Department pays interest on

subsidized loans for the first 3 years subsidized loans for the first 3 years Remaining balance of loan canceled after 25 Remaining balance of loan canceled after 25

years if the borrower made consistent years if the borrower made consistent monthly payments under a regular or monthly payments under a regular or reduced repayment plan or was in economic reduced repayment plan or was in economic hardship deferment hardship deferment

Effective Date: July 1, 2009Effective Date: July 1, 2009

Lender/Guarantor ImpactsLender/Guarantor ImpactsSecs. 301, 302, 305, 306, 701Secs. 301, 302, 305, 306, 701

• Reductions in guaranty agency collection Reductions in guaranty agency collection retention and account maintenance feesretention and account maintenance fees

• Reductions in lender insurance percentage Reductions in lender insurance percentage and Special Allowance Paymentsand Special Allowance Payments

• Increase in lender origination feesIncrease in lender origination fees• Elimination of Exceptional Performer StatusElimination of Exceptional Performer Status• Creation of pilot program to auction FFEL Creation of pilot program to auction FFEL

parent PLUS loansparent PLUS loans

Higher Education Act (HEA) Higher Education Act (HEA) Reauthorization UpdateReauthorization Update

• Senate HEA Amendments passed Senate HEA Amendments passed July 24, 2007July 24, 2007

• House bill may become available as early as House bill may become available as early as November 7November 7

2006-2007 2006-2007 Negotiated Rulemaking UpdateNegotiated Rulemaking Update

Final rules released during the week of October 29, 2007

Loan ProvisionsLoan Provisions

• Prohibited inducementsProhibited inducements

• Preferred Lender ListsPreferred Lender Lists

• Other provisionsOther provisions

ResourcesResources

• House Committee on Education and LaborHouse Committee on Education and Labor• Information for Financial Aid Professionals (IFAPInformation for Financial Aid Professionals (IFAP

))•

National Association of Student Financial Aid AdNational Association of Student Financial Aid Administrators (NASFAA)ministrators (NASFAA)

• National Council of Higher Education Loan ProgrNational Council of Higher Education Loan Programs (NCHELP)ams (NCHELP)

• Association of American Universities (AAU)Association of American Universities (AAU)

Questions?Questions?Comments?Comments?