Washington UpdateSo, It's Come At Last. At Last It's Come. The Day I Knew WouldCome At Last Has Come, At Last.

So, It's Come At Last. At Last It's Come. The Day I Knew WouldCome At Last Has Come, At Last.

Scott E. MillerPHEAA

smiller1@pheaa.orgApril 2010

So, What is There to Talk About?

What Happened? The New SAFRA President’s Budget Proposal What Could Be Next?

What Happened? The New SAFRA President’s Budget Proposal What Could Be Next?

Isn’t July 1, 2010 Soon?

91 Days From April 1st Until July 1, 2010 13 Weeks 2,184 hours 131,040

minutes 7,862,400

seconds

91 Days From April 1st Until July 1, 2010 13 Weeks 2,184 hours 131,040

minutes 7,862,400

seconds

86 Days From April 6th Until July 1, 2010 12 Weeks 2,064 hours 123,840

minutes 7,430,400

seconds

86 Days From April 6th Until July 1, 2010 12 Weeks 2,064 hours 123,840

minutes 7,430,400

seconds

Do You Remember SAFRA?

Student Aid and Fiscal Responsibility Act

Passed House of Representatives on September 17, 2009 (253 – 171)

Never Considered By the Senate HELP Committee

Meets Budget Reconciliation Instruction Net savings more than $1 Billion

Student Aid and Fiscal Responsibility Act

Passed House of Representatives on September 17, 2009 (253 – 171)

Never Considered By the Senate HELP Committee

Meets Budget Reconciliation Instruction Net savings more than $1 Billion

What the Heck is Budget Reconciliation?

Authorized By the Congressional Budget Resolution 2010 Resolution authorized reconciliation for Education and

Health Care Reconciliation “instruction” expires when new Budget

Resolution is passed Not Subject to Filibuster Limited Time for Debate Provisions Must Affect “Mandatory Spending” By:

Decreasing (e.g., spending cuts) or Increasing (e.g., tax cuts) “Byrd Rule” excludes extraneous measures

Resolution and Spending “Baseline” Must Apply to Whole Bill

Senate Can Consider Only One Reconciliation Bill Per Budget Resolution

Authorized By the Congressional Budget Resolution 2010 Resolution authorized reconciliation for Education and

Health Care Reconciliation “instruction” expires when new Budget

Resolution is passed Not Subject to Filibuster Limited Time for Debate Provisions Must Affect “Mandatory Spending” By:

Decreasing (e.g., spending cuts) or Increasing (e.g., tax cuts) “Byrd Rule” excludes extraneous measures

Resolution and Spending “Baseline” Must Apply to Whole Bill

Senate Can Consider Only One Reconciliation Bill Per Budget Resolution

The Process

Patient Protection and Affordable Care Act (H.R. 3590)

Senate passed with 60 votes on Christmas Eve House passed on March 21st (219 – 212) President Obama signed into law on March 23rd

Health Care And Education Affordability Reconciliation Act of 2010 (H.R. 4872)

Reconciliation Bill includes revisions to H.R. 3590 and modified SAFRA

House passed on March 21st (220 – 211) Senate passed amended version on March 25th

“Ping-ponged” back for House approval on March 25th

Patient Protection and Affordable Care Act (H.R. 3590)

Senate passed with 60 votes on Christmas Eve House passed on March 21st (219 – 212) President Obama signed into law on March 23rd

Health Care And Education Affordability Reconciliation Act of 2010 (H.R. 4872)

Reconciliation Bill includes revisions to H.R. 3590 and modified SAFRA

House passed on March 21st (220 – 211) Senate passed amended version on March 25th

“Ping-ponged” back for House approval on March 25th

What Was In SAFRA?

100% Direct Lending as of 7/1/10 Revamped Perkins Loan Program “Guaranteed” Increases in Pell Grant

Maximum – CPI + 1% FAFSA Simplification College Access & Completion Innovation

Funds Funding for Community Colleges,

HBCUs, Early Childhood Education, and Other Items

Approx. $8 billion for “Deficit Reduction”

100% Direct Lending as of 7/1/10 Revamped Perkins Loan Program “Guaranteed” Increases in Pell Grant

Maximum – CPI + 1% FAFSA Simplification College Access & Completion Innovation

Funds Funding for Community Colleges,

HBCUs, Early Childhood Education, and Other Items

Approx. $8 billion for “Deficit Reduction”

What’s Old is New Again…

The “Old” SAFRA Eliminate FFEL as of 7/1/10 Increase Administrative Funding for

Direct Lending Allow Non-Profit Agencies to Service

Direct Loans $50m for DL Transition Increase Pell Max. by CPI+1 Cut Interest Rates for Subsidized

Undergrads Revamp Perkins Program FAFSA Simplification (e.g..,

Eliminate Assets) College Access Completion &

Innovation Funds Increase College Access Challenge

Grant Funding Grants to Community Colleges HBCU & HSI Funding SEOG for Veterans Early Learning Challenge Grants $8b Towards Deficit Reduction

The “Old” SAFRA Eliminate FFEL as of 7/1/10 Increase Administrative Funding for

Direct Lending Allow Non-Profit Agencies to Service

Direct Loans $50m for DL Transition Increase Pell Max. by CPI+1 Cut Interest Rates for Subsidized

Undergrads Revamp Perkins Program FAFSA Simplification (e.g..,

Eliminate Assets) College Access Completion &

Innovation Funds Increase College Access Challenge

Grant Funding Grants to Community Colleges HBCU & HSI Funding SEOG for Veterans Early Learning Challenge Grants $8b Towards Deficit Reduction

The “New” SAFRA Eliminate FFEL as of 7/1/10 Increase Administrative Funding for

Direct Lending Allow Non-Profit Agencies to Service

Direct Loans $50m for DL Transition Increase Pell Max. by CPI Limited In-School Consolidation Lower IBR Payments for New

Borrowers in 2014 Increase College Access Challenge

Grant Funding HBCU & HSI Funding Funding of Job Training Programs for

Community Colleges $10b Towards Deficit Reduction $9b To Increase Savings in Health

Care Bill

The “New” SAFRA Eliminate FFEL as of 7/1/10 Increase Administrative Funding for

Direct Lending Allow Non-Profit Agencies to Service

Direct Loans $50m for DL Transition Increase Pell Max. by CPI Limited In-School Consolidation Lower IBR Payments for New

Borrowers in 2014 Increase College Access Challenge

Grant Funding HBCU & HSI Funding Funding of Job Training Programs for

Community Colleges $10b Towards Deficit Reduction $9b To Increase Savings in Health

Care Bill

How Did SAFRA Become“SAFRA Lite”?

CBO Scores Shift to 100% Direct Lending FY 2010 Baseline: $81b over 10 years FY 2011 Baseline: $61b over 10 years

SAFRA Pell Funding FY 2010 Baseline: $37b over 10 years FY 2011 Baseline: $68b over 10 years

Pell Grant Entitlement CBO FY 2011 Baseline: $197b over 10 years

Can Use Only One Baseline In a Reconciliation Bill

CBO Scores Shift to 100% Direct Lending FY 2010 Baseline: $81b over 10 years FY 2011 Baseline: $61b over 10 years

SAFRA Pell Funding FY 2010 Baseline: $37b over 10 years FY 2011 Baseline: $68b over 10 years

Pell Grant Entitlement CBO FY 2011 Baseline: $197b over 10 years

Can Use Only One Baseline In a Reconciliation Bill

So What Changed?

$37b for Pell Doesn’t Go as Far as it Used To

(i.e., “last year”) Items That Didn’t Make the Cut:

Perkins Overhaul Cutting Interest Rates FAFSA Simplification ECASLA Extension Funding beyond 2010 for DL transition costs Private Loan Debt Swap Reconsolidation

$37b for Pell Doesn’t Go as Far as it Used To

(i.e., “last year”) Items That Didn’t Make the Cut:

Perkins Overhaul Cutting Interest Rates FAFSA Simplification ECASLA Extension Funding beyond 2010 for DL transition costs Private Loan Debt Swap Reconsolidation

Some Specifics…

No Alternative to Direct Lending for Loans First Disbursed On Or After July 1, 2010

Pell Grant Maximum $5,550 for 2010-11, 2011-12, 2012-13 Beginning in 2013, increases at rate of

Consumer Price Index (CPI) Provision prohibiting decrease in Pell

maximum deleted due to Byrd Rule Estimate of $5,900 Pell Grant for 2019-20

• Down from original estimate of $6,900• Increased demand, larger shortfall caused cut

No Alternative to Direct Lending for Loans First Disbursed On Or After July 1, 2010

Pell Grant Maximum $5,550 for 2010-11, 2011-12, 2012-13 Beginning in 2013, increases at rate of

Consumer Price Index (CPI) Provision prohibiting decrease in Pell

maximum deleted due to Byrd Rule Estimate of $5,900 Pell Grant for 2019-20

• Down from original estimate of $6,900• Increased demand, larger shortfall caused cut

Saturday Night Pell Fever…

Increase in Maximum EFC Eligible for Pell Was, 95% of “appropriated amount”

• $4,816 for 2010-11 Now, 95% of “maximum award”

• $5,273 for 2010-11 Expected to reduce minimum Pell award

• Currently $976 (2009-2010)• ED will set 2010-11 minimum “this week”

More students eligible for ACG, SMART & SEOG

Increase in Maximum EFC Eligible for Pell Was, 95% of “appropriated amount”

• $4,816 for 2010-11 Now, 95% of “maximum award”

• $5,273 for 2010-11 Expected to reduce minimum Pell award

• Currently $976 (2009-2010)• ED will set 2010-11 minimum “this week”

More students eligible for ACG, SMART & SEOG

More Specifics…

In-School Consolidation Student must have at least TWO of:

• ECASLA Loan• Direct Loan• FFELP Loan

Available 7/1/10 – 6/30/11 College Access Challenge Grant

Funds flow to Governors Not intended to cover default aversion,

training, assistance to schools, financial literacy, etc.

In-School Consolidation Student must have at least TWO of:

• ECASLA Loan• Direct Loan• FFELP Loan

Available 7/1/10 – 6/30/11 College Access Challenge Grant

Funds flow to Governors Not intended to cover default aversion,

training, assistance to schools, financial literacy, etc.

And, More Specifics

$50 Billion for DL Transition Assistance “The Secretary shall provide institutions of higher education

participating, or seeking to participate, in the [Direct] loan programs…technical assistance in establishing and administering such programs.”

Only for FY 2010 Language scaled back

Income Based Repayment Plans Payments may be as low as 10% of borrower’s AGI Forgiveness of remaining balance after 20 years Effective for NEW BORROWERS as of 7/1/14

Non-Profit Servicers Not assured to receive all loans in their state Must meet qualifications established by Secretary 100,000 loan minimum Allocations based on same performance criteria as used for

TIVAS servicers No new servicers admitted after 2014

$50 Billion for DL Transition Assistance “The Secretary shall provide institutions of higher education

participating, or seeking to participate, in the [Direct] loan programs…technical assistance in establishing and administering such programs.”

Only for FY 2010 Language scaled back

Income Based Repayment Plans Payments may be as low as 10% of borrower’s AGI Forgiveness of remaining balance after 20 years Effective for NEW BORROWERS as of 7/1/14

Non-Profit Servicers Not assured to receive all loans in their state Must meet qualifications established by Secretary 100,000 loan minimum Allocations based on same performance criteria as used for

TIVAS servicers No new servicers admitted after 2014

What Did the President’s FY 2011 Budget Propose?

Released February 1, 2010 Endorses SAFRA & 7/1/10 Date for 100% DL Proposes Full Entitlement Status for Pell Allows ACG & SMART to Expire as of 7/1/11 Moves Perkins Changes to 7/1/11 Enhances Income Based Repayment Program

10% vs 15% of discretionary income Forgiveness after 20 years vs 25 years

Freezes Funding For Other Student Aid Programs

Released February 1, 2010 Endorses SAFRA & 7/1/10 Date for 100% DL Proposes Full Entitlement Status for Pell Allows ACG & SMART to Expire as of 7/1/11 Moves Perkins Changes to 7/1/11 Enhances Income Based Repayment Program

10% vs 15% of discretionary income Forgiveness after 20 years vs 25 years

Freezes Funding For Other Student Aid Programs

Is There Anything Else?

Private Loan Certification Borrower self-certification form in place NASFAA lobbying for FAA certification

Private Loan Debt Swap Allow conversion of SOME private loans to direct

consolidation loans Could require FAAs to retrieve COA & other aid data from

past years Limited group of borrowers get relief

Split Loans/Split Billing Multiple programs – FFELP, ECASLA, DL Treasury rules result in multiple payments for borrowers

Reconsolidation

Private Loan Certification Borrower self-certification form in place NASFAA lobbying for FAA certification

Private Loan Debt Swap Allow conversion of SOME private loans to direct

consolidation loans Could require FAAs to retrieve COA & other aid data from

past years Limited group of borrowers get relief

Split Loans/Split Billing Multiple programs – FFELP, ECASLA, DL Treasury rules result in multiple payments for borrowers

Reconsolidation

Is There Still Time to Be Heard?

Be SpecificBe CurrentPropose

SolutionsStay in Contact

Be SpecificBe CurrentPropose

SolutionsStay in Contact