CCCSFAAADecember 7, 2008

Federal Update

Jeff BakerFederal Student Aid

U.S. Department of Education

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Dependency Overrides

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Students Seeking Dependency Overrides

The Problem – Some students who are likely eligible for a

dependency override cannot find a school to consider an override at the time they need to submit a FAFSA.

Web FAFSA products to not allow a dependent student to submit without parental information.

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Students Seeking Dependency Overrides

The Solution – Students who are unable to provide

parental data will be able to submit their application through FOTW by indicating they believe that they have a special circumstance.

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Students Seeking Dependency Overrides

Application can be submitted for processing and all appropriate matches will be performed No EFC will be calculated These records will have a “special

circumstances” flag. School makes the determination after

obtaining documentation.

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FFEL Loan Purchase Programs Participation Purchase Program for partially disbursed 2008-

2009 FFEL loans through September 30, 2009.

Loan Purchase Program for fully disbursed 2008-2009 FFEL loans through September 30, 2009.

Participation Purchase Program for partially disbursed 2009-2010 FFEL loans through September 30, 2010.

Loan Purchase Program for fully disbursed 2009-2010 FFEL loans through September 30, 2010.

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Higher Education Opportunity Act

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HEOA - Pell Grants Year Round Awards – Up to two full

scheduled awards within on award year. Effective with the 2009-10 award year.

Life-Time Limit - Limits the duration of a student’s eligibility to 18 semesters. Effective with the 2008-09 award year

Changes the minimum Pell Grant award from a fixed $400 to ten percent of the appropriated maximum Pell Grant award. Effective for the 2009-10 award year.

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HEOA - Pell Grants

Provides a maximum Pell Grant award to any Pell eligible student whose parent or guardian was a member of the Armed Forces and died in Iraq or Afghanistan after September 11, 2001. Effective with the 2009-10 award year.

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HEOA – Student Loans

Changes Cohort Default Rate Calculation From two years to three years Transition Period 30% Penalty Rate

Increases “disbursement relief” CDR to 15%. Effective October 1, 2011

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HEOA – Student Loans

Removes VA Educational Benefits from “Estimated Financial Assistance” for loans and from “Resources” for campus-based aid. Effective with the 2010-11 award year.

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HEOA – Student Loans

Dependent students eligible for unsubsidized without parental FAFSA information. Effective on enactment – August 14,

2008 Paper FAFSA or EDE Submission Special process for Direct Loans

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Perkins Loans

Increases annual and aggregate loan limits – Annual $5,500 for undergrad Annual $8,000 for grad Aggregate $60,000 for grad Aggregate $27,500 for upper division

undergrad $11,000 for all othersEffective with the 2008-09 award year.

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Recent Legislation

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Higher Education Reconciliation Act (HERA) – February 8, 2006

College Cost Reduction and Access Act (CCRAA) – September 7, 2007

Ensuring Continued Access to Student Loans Act of 2008 (ECASLA) – May 7, 2008 Extended by HR 6899

Higher Education Opportunity Act (Reauthorization) – August 14, 2008

Recent Legislation

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ACG and National SMART Grants Eligible Non-Citizens Eligible At least half-time enrollment Students in certificate programs eligible, if

program is at least one year in length and offered at a two or four-year degree granting institution.

Awards based on student’s grade level instead of “academic year”

Effective July 1, 2009 – by HEOA

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Grade LevelBase

AmountAdditional

Unsubsidized

1st-yr Dependent $3,500 $2,000

2nd-yr Dependent $4,500 $2,000

Upper Division Dep. $5,500 $2,000

1st-yr Independent $3,500 $6,000

2nd-yr Independent $4,500 $6,000

Upper Division Indep. $5,500 $7,000

Graduate/Professional $8,500 $12,000

FFEL/DL Annual Loan Limits

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Dependency Criteria Independent student definition –

Is an orphan, in foster care, or a ward of the court, or was at any time when the student was 13 years of age or older.

Is, or was, an emancipated minor or is in legal guardianship in the student’s state of legal residence.

Has been verified as an unaccompanied youth who is a homeless child or youth.

Effective for 2009-2010

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Auto Zero EFC and SNT Increases Auto Zero EFC income level from

$20,000 to $30,000 (indexed to CPI)

Increases time from 12 to 24 months for receipt of means tested benefits

Adds Dislocated Worker in addition to type of tax return and means tested benefits

Effective for 2009-2010

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2007-2008 Rulemaking

TEACH Grant NPRM Published March 24, 2008 Final Rule Published June 23, 2008 Rules Effective July 1, 2008

Title IV Loan Programs NPRM Published July 1, 2008 Final Rule Published October 23, 2008 Rules Effective July 1, 2009

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2007-08 TEACH Final

Effective for the 2008-2009 award year. Must be repaid as Direct Unsubsidized Loan

if student does not – Teach for at least four years within

eight years of ceasing enrollment in the TEACH Grant eligible program, as a - Highly Qualified Teacher At a Title I school In a specified subject area.

“In for a dollar, in for four years.”

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2007-08 TEACH Final

Up to $4,000 per year for first undergraduate or post-baccalaureate (non degree) program - $16,000 aggregate

Up to $4,000 per year for graduate student - $8,000 aggregate

Prorated amounts for less than full-time enrollment

Award, when combined with other assistance, cannot exceed cost of attendance (No EFC)

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2007-08 TEACH Final

Institutional Eligibility See DCL GEN-08-07, posted to IFAP on

June 3, 2008 Institutional Choice whether to participate An institution that offers one or more

TEACH Grant-eligible programs may participate in the TEACH Grant Program

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TEACH Grant Statistics

Number of Approved TEACH Grant Schools 611Number of Originating and Disbursing Schools 179Amount of Originations Number of TEACH Originations $12,992,725Number of TEACH Originations 3,754Actual Disbursement Amount $4,639,083Average TEACH Grant Award $3,462ATS Notes Received 5,821

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2006-2007 RegulationsSchool Lender Relationships

(Effective 7-1-08)

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FFEL Loan Certification

A school may not: Refuse or delay certification based on

borrower’s choice of lender or GA Assign lender to first-time borrower Refuse to certify or certify a reduced

amount; except on a case-by-case basis Includes “school as lender”

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School may choose to have preferred lender list (includes web processes)

List must have at least 3 unaffiliated lenders Must disclose method/criteria for lender

inclusion on the list Must provide comparative information Must include prominent statement advising

borrowers that use of school preferred lender not required

FFEL Preferred Lender Lists

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Prohibited Inducements Affects FFEL lenders and guaranty agencies

Creates concept of “rebuttable presumption” for prohibited and allowed activities

Includes a non-exhaustive list of prohibited activities

Includes a list of allowed activities

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A Rational Approach to Federal Student Aid

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Mandates

“ The entire financial aid system—including federal, state, institutional, and private programs—is confusing, complex, inefficient, duplicative, and frequently does not direct aid to students who truly need it.”

- The Secretary of Education’sCommission on the Future of Higher Education

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Mandates

Congress, in passing the HEOA, required the Department of Education to issue a report on efforts to simplify the FAFSA that includes looking at the elimination of income data elements, as well as other items. 

Issues – Federal Student Aid The application is complex and

intimidating. Much of the data are unverifiable. Current EFC formula is arbitrary, difficult

to understand, lacks clarity and relevance, and subject to “gaming.”

Result of application (EFC) is “how much the student will NOT receive.”

Multiplicity of programs is confusing.

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Principles for Reform Access to Aid

Application will request information that is easily obtainable and verifiable.

Application will only ask questions necessary to determine eligibility and award levels.

Federal Student Aid Targets the neediest students; Is independent of other aid; Is predictable; Is portable, and Distributes aid through fewer programs.

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A Simplified FAFSA

Only ask for information needed to determine federal aid eligibility, aid types, and amounts.Two pages - no instruction pages(s).Fewer than 30 questions –

- Identification - Dependency- Contact Info - Income/Exempts- Eligibility - Certifications- Colleges and states

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Simple FAFSA

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Rational Approach

Establish–

Federal Student Aid Target (FSAT)

Federal Student Aid Commitment (FSAC)

Consolidate aid programs into one grant (Pell), one loan (DL/FFEL) and one work study (FWS) program.

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Federal Student Aid Target (FSAT)

Maximum amount of federal subsidized aid (Pell Grant, subsidized loans, and FWS).

Amount increases annually by CPI.

For example –- 100% of average Tuition & Fees, Books

& Supplies, and Meals & Housing at community colleges.

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Federal Student Aid Commitment (FSAC)

Student’s portion of FSAT based on AGI and IRS Number of Exemptions, related to HHS Poverty Levels.

Example: -- Grants up to 250% of poverty level; Sub loans and FWS up to 400% of poverty level;

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Unsubsidized Aid Includes unsubsidized Stafford and PLUS

loans;

Applies only after all other aid is awarded;

Covers difference between cost of attendance and all other sources of aid;

Includes annual loan limits for unsubsidized Stafford.

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Policy/Budget Considerations

Select “Dials” FSAT: percentage of cost of attendance at

which type of school FSAC: percentages of HHS poverty level to

be used for grant, subsidized loan, and work study

Determine “Levers” Maximum spending with current

allocations Optimized spending to ensure access and

success

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0

2,000

4,000

6,000

8,000

10,000

12,000

Pell Sub Loan

Pell Max = $4,800

Sub Loan Max = $5,500

Examples of Dials and Levers

0

2,000

4,000

6,000

8,000

10,000

12,000

Lowto $0

$3Kto

$6K

$9Kto

$12K

$15Kto

$18K

$21Kto

$25K

$29Kto

$32K

$36Kto

$40K

$44Kto

$48K

$51Kto

$55K

$58Kto

$62K

$68Kto

$71K

$73Kto

$80K

above$88K

Pell Sub Loan

Pell Max = $4,800

Sub Loan Max = $6,000

-

2

4

6

8

10

12

14

Lowto $0

$3 to$6

$9 to$12

$15to

$18

$21to

$25

$29to

$32

$36to

$40

$44to

$48

$51to

$55

$58to

$62

$68to

$71

$73to

$80

above$88

Income Level (in thousands of $)

Aid

(in

th

ou

san

ds

of

$)

Pell Grants

Subsidized Loans

0

2,000

4,000

6,000

8,000

10,000

12,000

Pell Sub Loan

Pell Max = $4,800

Sub Loan Max = $5,200

Unsubsidized Unsubsidized

Unsubsidized Unsubsidized

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1 2 2 3 4 5 6 7 8 More than 8

AGIMarried w/

Spouse Including Child

Income Cut-Off $21,000 $29,000 $36,000 $45,000 $55,000 $64,000 $73,000 $82,000 $92,000 $92,000

Low to $0 3,400 3,600 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 $1 to $3,000 3,400 3,400 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 $3,001 to $6,000 3,400 3,400 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 $6,001 to $9,000 3,400 3,400 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 $9,001 to $12,000 2,800 2,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 $12,001 to $15,000 1,950 2,400 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 $15,001 to $18,000 1,100 2,100 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 $18,001 to $21,000 400 1,500 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 $21,001 to $25,000 - 800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 $25,001 to $29,000 - 400 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 $29,001 to $32,000 - - 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 $32,000 to $36,000 - - 3,000 3,900 4,000 4,100 4,200 4,300 4,400 4,500 $36,001 to $40,000 - - - 2,600 3,100 3,200 3,300 3,400 3,500 3,600 $40,001 to $45,000 - - - 2,000 2,100 2,200 2,300 2,400 2,500 2,600 $45,001 to $48,000 - - - - 1,500 1,800 1,900 2,000 2,100 2,200 $48,001 to $51,000 - - - - 1,200 1,400 1,500 1,600 1,700 1,800 $51,001 to $55,000 - - - - 900 1,000 1,100 1,200 1,300 1,400 $55,000 to $58,000 - - - - - 800 900 1,000 1,100 1,200 $58,001 to $64,000 - - - - - 600 600 700 800 1,000 $64,001 to $68,000 - - - - - - 600 700 700 900 $68,001 to $71,000 - - - - - - 500 500 700 800 $71,001 to $73,000 - - - - - - 500 500 700 700 $73,001 to $82,000 - - - - - - - 400 600 600 $82,001 to $87,000 - - - - - - - - 500 500 $87,001 to $92,000 - - - - - - - - 400 400

"Single Persons, or Married w/ no

Children" "Families w/ a minimum of one Child"

Simple Look-Up Table(For Illustrative Purposes Only)

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What Does This Mean For Students?

A FAFSA that encourages access; Real-time feedback on probable Federal

Student Aid; Better awareness of state and institutional

value-added aid, and Predictability for persistence.