MASFAA Spring Conference Bay St. Louis, MS June 17, 2010 Federal Update

MASFAA Spring ConferenceBay St. Louis, MS

June 17, 2010

Federal Update

Agenda• Title IV Program Budget• Student Aid Reform Bill• FSA Programs Update• Two Pells in an Award Year• Operational Considerations• Recent Regulatory and Guidance Changes

Title IV Program BudgetAid Available (in thousands)

FY 2009* FY 2010 FY 2011**(AY 09-10) (AY 10-11) (AY 11-12)

Pell Grant $ 28,213,300 $ 32,295,200 $ 34,834,300 (Max Award) $5,350 $5,550 $5,710 FSEOG $ 958,800 $ 958,800 $ 958,800 FWS $ 1,417,300 $ 1,170,800 $ 1,170,800 Perkins $ 1,106,100 $ 1,041,500 $ 2,609,200 LEAP $ 161,555 $ 161,555 ― ACG/SMART $ 864,000 $ 932,000 ― TEACH $ 72,300 $ 79,800 $ 93,200 Loans $ 96,516,200 $108,762,900 $116,393,200 TOTAL $129,309,555 $145,402,555 $156,059,500

* Includes Recovery Act funding ** President's FY 2011 Budget Request

Program

Student Aid Reform Bill (HR4872) Signed on March 30, 2010

• Pell Grant – $61 billion increase (includes $36 billion for yearly

increases)– $5,550 maximum award for 2010-11– Indexed to CPI starting 2014– Pell shortfall paid down except for $5.5 billion

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• 100% Direct Lending as of July 1, 2010

‒Sub, Unsub, PLUS, Consolidation

‒No more FFEL first disbursements

‒Subsequent FFEL disbursements can be made

‒In-school consolidation – One year

6

What’s Not In the Bill

‒ No EFC Calculation Simplification

o Elimination of Assets

o All financial data from tax return

‒ No new Perkins Program

o Expansion of Program to more schools and more students

o Recall of existing loans to FSA

‒ Relaxation of Drug Conviction Provision



• Additional Funding for HBCU, Hispanic Serving Institutions, Tribal Colleges and Universities, and other MSIs receive additional funding

• American Graduation Initiative not included• Additional Funding for community colleges

(College Access College Grant) – Deadline for states to submit application is July 2, 2010

• $10 billion in deficit reduction

7

FSA Programs Update

American Opportunity Tax Credit

• Excludable (non EFA) income in needs analysis (line 49 on 1040 and line 31 on 1040A)

• Also refundable portion on line 66 on 1040 is excludable– Same as Hope and Lifetime Learning Tax Credits

9

NPRM To Be Released June 18, 2010(45 Day Comment Period)

• Foreign Schools

• Program Integrity

10

Effective 7/1/2011

Program Integrity NegReg Agenda

Definition of a high school diploma Ability to Benefit Misrepresentation by institutions Incentive compensation State authorization and institutional

eligibility Gainful employment in a recognized

occupation Definition of credit hour

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Program Integrity NegReg Agenda

Agreements between institutions of higher education Verification of information on FAFSA Satisfactory academic progress Retaking coursework Return of Title IV aid: Term-based module programs Return of Title IV aid: Taking attendance Disbursements of Title IV funds

12

Direct Loan Transition Statusas of April 29

Split Servicing

• ED realizes concern with students with split servicing

• Currently approximately 18% of FFEL loans are held by lenders.

• Process in place to review and address FFEL/DL portfolio

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New Exit Counseling www.nslds.ed.gov/nslds_FAP/secure/logon.jsp

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Students; www.nslds.ed.gov

EA March 29, 2010

Cohort Default Rates

Public Service Employees Loan Forgiveness

• Eligible borrower with DL (including PLUS and Grad PLUS)• FFEL borrowers gain eligibility with DL consolidation

– no reconsolidation of existing joint reconsolidated FFEL• Requires 120 monthly payments beginning October 1,

2007 (within 15 days of due date) – Does not have to be consecutive payments

• Full-time public service employees• 34 CFR 685.219

17

Federal Perkins “Red Flag Rule”

• Electronic Announcement May 6, 2010• FTC delays Identify Theft Red Flag Rule

until June 1, 2010*• www.ftc.gov/redflagsrule

* EA June 14, 2010 – Another Red Flag enforcement delay until 12-31-10

Federal Perkins Cohort Default Rate

• June 30, 2009 rate posted eCampus-Based Report in April 2010

• National rate = 10.04% with $894 million in default

• Mississippi rate = 13.46% with 12.4 million in default

New Non-EFA Veterans Benefit

• Marine Gunnery Sergeant John D. Fry Scholarship for children of service members who die in line of duty after September 10, 2001

• EA August 13, 2009

Pell Reporting ChangesPell Reporting Changes• Effective 2010-11 award year

• Maximum number of days for Pell Advanced Funded schools to submit actual disbursements of “true” has been reduced from 30 days to 7 days.

• Same as currently required for other FSA programs

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Reprocessed 2010-11 ISIRs

• Electronic Announcement May 14, 2010 (and EA May 5, 2010)

• Based on Revised Pell Payment Scheduled (DCL P-10-03), new maximum EFC is 5273

• CPS reprocessing began May 18, 2010

Iraq/Afghanistan Dependent Update

• Electronic Announcement May 13, 2010• DoD/ED match commenced late April 2010• 2009-10 eligibility for zero EFC – 30 students

(25 schools to receive pass word protected file)• DoD match flag is 298 and COD “Post 9/11

Deceased Veteran Indicator” set to true• 2010-11 Iraq and Afghanistan Service Grant -

COD will implement later this year

Two Pells in One Award Year Funding Availability

• Schools will be able to view and draw down 2010-2011 Pell Grant Initial funds in G5 on Tuesday, May 25, 2010.

• COD will accommodate by May 26, 2010

Receiving up toTwo Pell Grants

During a Single Award Year

CFR: 690.67

Two Pells In An Award Year• Authorized by the Higher Education Opportunity Act

(HEOA).• If eligible, student able to receive all or a portion of a

second Scheduled Award within an Award Year.• Objective is to help needy students accelerate their

academic progress.• Effective for the 2009-2010 Award Year.

– Implementation by schools is not optional. – Students eligible for second Scheduled Award in 2009-

2010 must be paid.• Final Regulations Published October 29, 2009.

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Two Pells: Student Eligibility • First Scheduled Award

– Student otherwise Pell Grant eligible.– Enrolled at any enrollment status.– Amounts received will count toward life-time

aggregate limit, if applicable.• Second Scheduled Award

– Student otherwise Pell Grant eligible.– Enrolled at least half-time.– Received 100% of first Scheduled Award.– Beginning with 2010-2011 Award Year, student must

demonstrate academic year acceleration.5

Acceleration• At least one credit or clock hour (or partial

hour if school uses partial hours) in the payment period must be attributable to the student’s next academic year.

• Not “grade progression”• Must be applied for any required

recalculation.• Gives meaning to statutory use of term

“accelerate”

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Acceleration

Applies beginning with the 2010-2011 Award Year‒ Cross-over period payment awarded from

upcoming year does not require counting hours because payment will be from first Scheduled Award.

‒ Hours earned in summer 2010 count toward acceleration later in 2010-11 Award Year

50

Transfer Students Options

• Assumption Method• Hour-earned Method• Receipt of Additional Information• School’s policy options:

– Student by student – Single method to all students in a program – Program by program

34 CFR 690.67(b)

Transfer Example – Assumption Method

• Receives 100% of 1st Schedule Award at School A then transfers to School B

• What should School B do under the Assumption Method? – Assume completed the credit or clock

hours in the 1st Academic Year

Transfer – Assumption Method

• Receives < 100% 1st Scheduled Award at School A, then transfers to School B

• How does School B determine eligibility?– Use Formula for credit/clock hours

Pell disbursed – School A * Credit/clock hours in AY – School BAmount of Scheduled Award at prior school

Transfer – Assumption Method

• Sample Formula for < 100 % received:

$4,900 disbursed at Prior * 24 in your AY$5,350 scheduled at prior school

= 21.9 hours Round down to 21 hours

Transfer – Hours Earned Method

• Hours Earned Method optional• Must have time period when hours

earned• Exclude AP, IB, testing out, life

experiences• Must attribute to the current award year

any credits/clock hours earned at other schools.

Transfer Students Options

• Receipt of additional information– During the payment period

•Adjust if necessary– After payment period ends

•No adjustment requiredXYZ University

Academic Transcripts

XYZ University

Academic Transcripts

34 CFR 690.67(b) 4

Special Circumstances

• Financial Aid Director may– Waive hours attributable to 2nd AY if

•Circumstances beyond student’s control•Individual basis determination

• Documentation always required

34 CFR 690.67(c)

Special Circumstances

• Waiver includes, but not limited to– Withdrawals – due to illness– Inability to register – classes not offered

• Waiver does not include– Withdrawals to avoid a bad grade– Not registering due to a particular

instructor

34 CFR 690.67(c)

Non-applicable credit or clock hours

• Eligibility for the 2nd Scheduled Award may not use– Advance Placement (AP) programs– International Baccalaureate (IB),– Testing out,– Life experiences or – Similar competency measures

34 CFR 690.67(c)

Crossover Payment Periods -

payment period thatcontains 6/30 and 7/1

(CFR 690.64)JUNE

JULY

2009-10

2010-11

2009-10 Crossover Transition

• If considered part of 09/10 award year– New regulations do NOT apply– Do not have to pay out of the award year that

produces the highest payment– Do not have to ensure hours attributable to 2nd

academic year– Must be at least half-time

• If considered part of 10/11– New Regulations apply

2009-10 Crossover Transition 2009-2010 Award Year

– If awarding second Scheduled Award from 2009-2010 (including summer 2010 cross-over) new regulations do not apply.

– Must develop 2010 cross-over written policy prior to July 1, 2010 based on HEOA, DCL GEN-08-12, and good faith.

2010-2011 Award Year– If awarding from 2010-2011 and beyond (including

summer 2010 cross-over) new regulations do apply.

2009-10 Crossover Transition Policy established on or after July 1, 2010

‒ Rules apply for both years–o Must pay higher of student’s 2009-2010 or

2010-2011 award.o If 2009-2010 higher, acceleration rule

applies, regardless of school’s policy. If student has not progressed to next

academic year, student not eligible for 2009-2010 award, therefore pay Pell from 2010-2011, if eligible.

Crossover PeriodsCrossover Periods• When October 29, 2009 regulation becomes

effective:– MUST assign a crossover payment period to award

year in which student receives greater payment at time payment is initially calculated*

– MUST reassign if subsequent information to initial calculation shows greater payment would result

• But not later than ED Pell processing deadline – 9-28-10 – MAY reassign if information received AFTER ED Pell

processing deadline but BEFORE Pell Admin Relief deadline

* 2009/10 crossover exempt if school treats as part of * 2009/10 crossover exempt if school treats as part of 2009/10 award year2009/10 award year

Two Pells: Crossover Payment Period • May be different award year for Pell than for

other Title IV aid.• Packaging issues

– For Pell, use EFC for the award year from which the student will be paid.

– For other aid, EFC and COA can be from the other year, but must be the same for those programs.

– Amount of Pell is EFA for other aid.– If loan in package, school may chose EFC and COA from

other year but, if campus-based also, EFC and COA must be same as loan.

Examples ofPayment from Two Scheduled Awards

CFR: 690.63(h)

2009-10 Two Scheduled Pell Awards(Summer as Header and Trailer)

New Rule: Up to Two Scheduled Awards per Award YearStudent’s Scheduled Award is $5,350 for the award year(Summer 2009 and 2010 are part of the 2009-10 award year)*

Fall 2009$2,675

Summer 2010$2,675

Summer 2009$2,675

2009-10 Award Year

Spring 2010$2,675

200% 2009-10 AY

* Policy written before July 1, 2010

Term Based Example

Spring 2010$2,675

Fall 2010$2,775

Fall 2009$2,675

Spring 2011$2,775

2009-10 Award Year

2010-11 Award Year

Summer 2011$2,775

Summer 2010$2,675

150% 2009-10 AY

150% 2010-11 AY

New Law: Up to 2 Scheduled Awards per Award YearAssume student’s 2009-10 Scheduled Award is $5,350 and $5,550 for 2010-11

New Law: Up to Two Scheduled Awards per Award Year 1500 clock hour program; AY = 900 hours/26 weeks Student’s Scheduled Award is $5,350 for the award year

450 hours/13 weeks$2,675




2009-10 Award Year

2009-10 Award Year

160% 2009-10 AY

Clock Hour Example

Spring 201050% Paid9 HoursEarned

Fall 200950% Paid9 HoursEarned

First Scheduled Award

Summer 2010Enrolled in

6 HoursNOT ELIGIBLE

Second Scheduled Award

Six Hours to Prior Academic YearNo Hours for New Academic Year

Cannot pay second Scheduled AwardMay pay from 2010-11 Award Year

Assumes Academic Year defined as 24 hours

Semester Academic Year Progression

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Spring 201050% Paid6 HoursEarned



Summer 2010Enrolled in12 HoursELIGIBLE


Eleven Hours to Prior Academic YearOne Hour for New Academic Year

Pay 50% of Second Scheduled Award

Assumes Academic Year defined as 24 hours

Semester Academic Year Progression

55

Winter 201125% Paid9 HoursEarned



Spring 201134% Paid

12 Hours Earned

Assumes Academic Year Defined as 36 Hours

Quarter Academic Year Progression

Summer 2011Enrolled in 6 Hours

ELIGIBLE

Five Hours to Prior Academic YearOne Hour for New Academic Year

Pay 16% remaining of First Scheduled Award and 1% of


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Spring 201150% Paid12 Hours

Completed

Fall 201050% Paid12 Hours

Completed

First Scheduled AwardFull-Time


6 HoursELIGIBLE


Assumes Academic Year Defined as 24 hours

No Hours to Prior Academic YearSix Hours for New Academic Year

Semester Hours Completed


Completed


Completed


6 HoursELIGIBLE



Three Hours to Prior Academic YearThree Hours for New Academic Year




Completed


Completed

Summer 2011Enrolled in12 HoursELIGIBLE



Eleven Hours to Prior Academic YearOne Hour for New Academic Year




Completed


Completed


6 HoursNOT ELIGIBLE



Six Hours to Prior Academic YearNo Hours for New Academic Year



Summer 201050% Paid9 Hours

Completed


Completed



6 HoursELIGIBLE

Paid ½ time

2nd Scheduled Award



Spring 2011Enrolled in

9 hoursELIGIBLE

Paid ¾ time

6 hours prior AY3 hours 2nd AY


Assumes completed at least 6 spring hrs

Assume Summers part of 10/11 award year



Completed


Completed



6 HoursELIGIBLE

Paid ½ time

2nd Scheduled Award




9 hoursNOT ELIGIBLE

0% paid



Assumes completed all spring hrs




Completed


Completed



6 HoursNOT ELIGIBLE

0% paid

2nd Scheduled Award




9 hoursNOT ELIGIBLE

0% paid



Assumes completed only 3 spring hrs



Two Scheduled Awards Same Payment Period

• Payment Period Award may included Payment from 1st Scheduled Award and 2nd Scheduled Award if– Student is eligible for 2nd scheduled (690.67) and– Payment due student > 1st scheduled award amount

• Calculated Payment = 1st Scheduled Award Balance+ Amount from 2nd Scheduled Award = Students Payment for Payment Period

Two Pells: Same Payment PeriodSummer

2009Enrollment

Status9 hours

Three-Quarter

Award Amount

$2,006

% of Scheduled

Award Used37.5%

Remaining Eligibility 162.5%

Fall 2009

12 hoursFull-time

$2,675

50%

112.5%

Spring 2010

12 hoursFull-time

$2,675 ($ 669 – from 1st

$2006 – from 2nd)

50%

62.5%

Operational Considerations

COD and Year-Round Pell • New field added to COD record

– Additional Eligibility Indicator (AEI)• School sets AEI to “true” on

origination record when awarding any part of second scheduled award

• AEI student will not trigger POP MRR but will trigger concurrent enrollment MRR

COD and AEI

Your Student Name Big Valley State University111111111101/20/10

Value = Yes or No

Updating COD and AEI

Click hear to access the AEI Update field

Step 1 :

Click: -Person -Pell -Award Detail -Update Award

John Q Jones Any University222222222 PellDOB 1/21/1988 10/11

Updating COD and AEI

Click on the box to set flag

Step 2 :

Must check the AEI box

to set the flagAnd receive your funds!$$$$$$$$

View the AEI Flag

Your Student Name Big Valley State University111111111101/20/10

Value = Yes or No

Additional Eligibility Indicator Checkbox

EDE Express

NSLDS and AEI on ISIR

• Added to ISIR record

• The valid content for these fields are:– Y = Student received additional Pell award

funds in excess of a single year’s award– N = Student received a single Pell award

New

2010-11

Final Reminders

• Schools can not ignore– Crossover payment periods– Intersessions

• Must pay eligible students• Must implement, regardless of software limitations

– Process manually, if necessary

Maximum Duration of Eligibility

• First-time Pell recipients– Beginning with 2008-09 and after – Pell eligibility limited to 18 semesters – Department equivalent is 9 scheduled

awards– 900% of life-time Pell eligibility– Students enrolled less than full-time will be

assessed at the fractional enrollment status– LEU Lifetime Eligibility Used flag

Maximum Duration of Eligibility

Fall 2009TQT

Fall 2010HT

Summer 2014FT

Fall 2014FT

Spring 2015FT

Fall 2008FT

Spring 2009FT

Spring 2010TQT

Summer 2010TQT

Student’s Pell disbursements based Percentage Used on enrollment status per payment period 787.5% (cumulative)

= 100%

Summer 2011HT

Fall 2011HT

Fall 2015FT

Summer 2015FT

200%

Spring 2016FT

Summer 2016FT

Fall 2016FT

112.5%

75%

150%

Spring 2017FT

Summer 2017FT

150%

=

=

=

=

=

2008-09*

2009-10

2014-15

2010-11

2015-16

2016-17

* First time received Pell

Recent Regulatoryand Guidance Changes

Recent Regulatory and Guidance Changes• Not-for-profit servicers sought – June 1, 2010• Untaxed unemployment compensation

(PJ EA May 21, 2010)• EA June 3, 2010 – Servicer Delinquency

Prevention Activities• DCL GEN-10-07 – Battered Immigrants-Qualified

Aliens eligible for Title IV• DCL GEN-10-08 – Institutional requirements for

combating unauthorized of use of copyrighted material

Recent Regulatory and Guidance Changes

• DCL GEN-10-09 – New textbook regulatory guidance

• DCL GEN-10-10 – Q&A on 100% DL (will be posted shortly)

• Federal Register (Vol. 75, No. 109, June 8, 2010) – ISIR/SAR processing deadlines

• TILA questions – 202-452-3667 (Federal Reserve Board Help Desk) or [email protected]

Fixed Rates for Loans Disbursed on or after 7-1-2006

Loan Type Grade Level First Disbursed Between 7-1-2009 and 6-30-2010

First Disbursed Between 7-1-2010 and 6-30- 2011

Subsidized Loans Undergraduate

Graduate

5.60%

6.80%

4.50%

6.80%

Unsubsidized Loans Undergraduate

Graduate

6.80%

6.80%

6.80%

6.80%

PLUS Loans Parent and Grad Student

7.90% for DL and 8.50% for FFEL

7.90% for DL and 8.50% for FFEL

Variable Rates for Loans Disbursed Between 7-1-1998 and 6-30-2011

Contact Information

Contact me at:

Michael C. [email protected]

Contact my supervisor at:

Thomas [email protected]

Documents

MASFAA Spring Conference Bay St. Louis, MS June 17, 2010 Federal Update