u.s. department of education federal update

U.S. Department of Education

Federal Update

Dan KlockFederal Student Aid

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Appropriations and Budget

Legislative Update

Cohort Default Rates

Direct Loan Transition

IRS Data Retrieval

Two Pells In One Award Year

Regulatory Update

Other

Today’s Topics

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Appropriations andProgram Budget

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

Pell Grant $36,492,000,000 $26,988,100,000 $34,878,000,000 (Max Award) $5,350 $5,550 $5,710

FSEOG $ 757,500,000 $ 757,500,000 $ 757,500,000

FWS $ 1,180,500,000 $ 980,500,000 $ 980,500,000

Perkins $ 67,200,000 ― -

LEAP $ 63,852,000 $ 63,852,000 ― ACG/SMART $ 73,000,000 $ 1,336,000,000 ― * Includes Recovery Act funding** President's FY 2011 Budget Request

Program

Title IV Appropriations

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Title IV Aid AvailableFY 2010 FY 2011*(AY 10-11) (AY 11-12)

Pell Grant $ 32,295,200,000 $ 34,834,300,000 (Max Award) $5,550 $5,710

FSEOG $ 958,800,000 $ 958,800,000

FWS $ 1,170,800,000 $ 1,170,800,000

Perkins $ 1,041,500,000 $ 1,000,000,000

LEAP $ 161,555,000 ―

ACG/SMART $ 932,000,000 ―

TEACH $ 79,800,000 $ 93,200,000

Loans $ 108,762,900,000 $ 116,393,200,000

TOTAL $145,402,555,000 $154,450,300,000

Program

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Legislative Update

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Legislative Update

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FFEL/Direct LoanCohort Default Rates

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National Student Loan Default Rates

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Pennsylvania Default Rates(FY 2006 - FY 2008)

2006 2007 2008

Rate X.X% X.X% X.X%

Borrowers inRepayment 86,788 96,517

Borrowers inDefault 3,212 4,056

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HEOA Changes

• Increases CDR monitoring period from two to three years

• Increases disbursement relief threshold from 10 percent to 15 percent

• Increases sanction threshold default rate from 25 percent to 30 percent

• Establishes transition period to implement sanctions

What is the CDR Calculation?

Currently, a school’s cohort default rate is:The percentage of the number of the school’s FFEL and Direct Loan borrowers who enter repayment in one Federal Fiscal Year who default in that Federal Fiscal Year or by the end of the next Federal Fiscal Year.

Beginning with the 2009 cohort will be:Borrowers who default in that Federal Fiscal Year or by the end of the next two Federal Fiscal Years.

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2-Year Versus 3-Year Calculation

The Numerator is the number of borrowers from the denominator who default within a cohort period

The Denominator is the number of borrowers who enter repayment within a cohort period

3555000 .071 or 7.1%

6055000 .121 or 12.1%

5,000

FY-09 FY-10125 230

5,000

FY-09 FY-11FY-10

125 230 250

Transition Period

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• Legislation: Health Care and Education Reconciliation Act of 2010

• 100% Direct Loans July 1, 2010 and forward

• Earliest disbursement date drives remaining FFELP activity


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• Some things are the same• Virtually ALL Title IV regulations• Origination/Certification• Loan types/Interest Rates*/Repayment**• Counseling• Promissory Note

*FFELP PLUS 8.5%...DL PLUS 7.9

**Income Contingent unique to DL


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• Some things are different• Loan benefits unique to DL• Actual disbursement

– Origination fee/rebate

• Funding/Cash• Additional locations to a main campus• Reconciliation

– Program requirement


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Legislation

• Higher Education Opportunity Act of 2008 Pub. L. 110-315 (effective 2009-2010)

• More grant aid to needy students

• Eligibility for a second Scheduled Award in an award year to accelerate completion

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• Contracted with 4 additional servicers– ACS (current servicer)– Nelnet– Sallie Mae– Great Lakes Education Loan Services– AES/PHEAA

• Will “service” borrowers only…no origination responsibility


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Can a school select the servicer with whom they wish to work?

• No. Loans will be disbursed to all servicers systemically as they book

How will a school know which servicer has a particular loan?

• By looking at the loan in NSLDS


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IRS Data Retrieval

IRS-FSA Concept Federal Student Aid (FSA) and the Internal

Revenue Service (IRS) developed a non-consent solution to simplify FAFSA completion.

Tax filer retrieves own data No Consent Voluntary

Will allow some applicants to retrieve their income tax data from the IRS.

IRS data can be automatically transferred to FOTW.

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Option to Access IRS Information

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Get My Federal Income Tax Information

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Federal Income Tax Information Provided

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ISIR Codes and Flags

CPS will set flags and comment codes to indicate that student and/or parent transferred IRS data into FOTW

Comment codes will appear in – FAA Information section of the ISIR Student Inquiry section of FAA Access

Flags and codes set based on certain conditions.

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IRS Request Flag ValuesStudent & Parent IRS

Request Flag Description

00IRS data request for the student/parent was not submitted to IRS (default value)

01IRS data request for the student/parent was sent to IRS

02

IRS data for the student/parent was returned from the IRS and was not changed by the user

03

IRS data for the student/parent was returned from IRS and was changed by the user

04

IRS data for the student/parent was transferred from the IRS and on a correction entry at least one IRS data field was changed by the user

05 (Under Construction)

IRS data for the student/parent was transferred from the IRS but may be incomplete based on marital status and tax filing status

06 (Under Construction)

IRS data for the student/parent was transferred from the IRS but marital status conflicts with tax filing status

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Implementation Schedule

2009-10 IRS process began in January 2010. Pilot to test proof of concept.

2010-11 IRS data share will begin in September of 2010.

2011-12 IRS data share expected to begin with start-up in January 2011. Within a couple of weeks electronic tax filing. Within several weeks of paper tax filing.

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Enhancements

• Add data retrieval process to Corrections on the Web

• Add Spanish language version or enable Spanish FOTW filers to use retrieval process

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Under Construction!

Two Pells in an Award Year

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Legislation

• Higher Education Opportunity Act of 2008 Pub. L. 110-315 (effective 2009-2010)

• More grant aid to needy students

• Eligibility for a second Scheduled Award in an award year to accelerate completion

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• Team V-General and Nonloan Programmatic Issues in 2009

• Notice of proposed rulemaking: August 21, 2009

• Final regulations: October 29, 2009

• Effective date: starting with the 2010-2011 Award Year

• Dear Colleague Letter

Negotiated Rulemaking

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Unchanged by Two Pells

• Scheduled Award:– Is the amount that a full-time student would

receive for a full academic year based on the student’s EFC and COA.

– Prorated by payment period based on hours and weeks of instructional time attended.

• Payment periods

• Payment for a payment period calculations

Pell Constants

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Pell Constants

Changed by Two Pells and no longer true

• Student may receive only one Scheduled Award in an award year.

• Student is always eligible for payment as less-than-half-time student.

• Institution may assign a crossover payment period to either award year as a general policy or on a case-by-case basis.

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Eligible Student

• Is enrolled at least as a half-time student

• Is enrolled in an eligible program leading to a bachelor’s or associate degree or other recognized educational credential.– An exception to the degree or certificate is

provided for students with intellectual disabilities.

• The program must be greater than one academic year in length—in both hours and weeks of instructional time.

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• Is enrolled in credit or clock hours attributable to the student’s second academic year in the award year

– Has successfully earned sufficient hours in the award year that some hours in payment period are attributable to the second academic year in that award year

– Is a major change from proposed regulations

Eligible Student

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Crossover Payment Period

• Must assign the payment period to the award year in which the student receives the greater payment.

• Must make assignment to the award year with the greater payment regardless of whether the payment for the first award year would be from the first or second Scheduled Award of that award year.

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If Law Had Not Changed - Semester Example

Student may only receive up to ONE Scheduled Award within an Award Year. Assume student’s 2009-2010 Scheduled Award is $5,350 and will be $5,550 for 2010-2011.

Spring 2010$2,675

Summer 2010$2,775

Fall 2009$2,675

Fall 2010$2,775

2009-10 Award Year

2010-11 Award Year

Spring 2011$0

100% 2009-10 AY

100% 2010-11 AY

Summer 2010$0

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New Law - Semester 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

Student may receive up to TWO Scheduled Awards within an Award Year. Assume student’s 2009-2010 Scheduled Award is $5,350 and will be $5,550 for 2010-2011.

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New Law - Semester Example

Student may receive up to TWO Scheduled Awards. Student’s Scheduled Award is $5,350 for the 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

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Other Information

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Awards for Children of Deceased Military

Service Members MilitaryFor any student whose parent or guardian was a member of the U.S. Armed Forces and died as a result of military service in Iraq or Afghanistan after September 11, 2001. If undergrad and Pell eligible EFC, all Title IV aid

awarded using zero EFC. If not Pell eligible EFC, undergraduate student gets an

“Iraq/Afghanistan Service Grant” award the amount of maximum Pell for enrollment status. All other Title IV aid awarded using calculated EFC.

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Department of Defense Match

• In May 2010, began matching applicant records in CPS against DoD file– 2009-10 applicants –

• Calls and e-mails to FAA’s• Letters to students

– 2010-11 applicants –• New DoD Flag set on ISIRs• Letters to students

• To ensure all eligible students are awarded aid appropriately, FAA’s must pay attention to new ISIR flag

• DCLs posted on IFAP provide operational guidance

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Parent PLUS and FAFSA Beginning 2011-2012 student must file

FAFSA for Parent PLUS Loan 98 percent already file COD will monitor Need to perform database matches to

verify that student is eligible Social Security Number Citizenship Status Selective Service NSLDS for defaults and overpayments

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Authority and guidance

• Spelled out in Sec. 479A of HEA

• No regulations

• Department is prohibited from regulating

• DCLs offer clarification on specific issues

Professional Judgment

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Recent special guidance• Dear Colleague Letter GEN-09-04;

issued April 2, 2009– Encourages FAAs to consider special

circumstances during these challenging economic times

• Dear Colleague Letter GEN-09-05; issued May 8, 2009

– Letters to all recipients of unemployment insurance benefits that can be used as documentation

Professional Judgment

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Experimental Sites Initiative Federal Register Notice Changed Approach Solicited ideas for possible experiments Must be real experiments

Control and experimental groups Rigorous evaluation and reporting Possibility to impact change to law, rules, etc.

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Experimental Sites Initiative Received100 suggestions for possible

experimentsSome duplicates or close enoughSome schools can do under current

rulesSome “out of bounds”

Staff Reviewed about 35 Staff will recommend six to ten

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Experimental Sites Initiative Second Federal Register Notice

Will describe “approved” experimentsWill ask schools to volunteer ED will determine which schools are

approvedPPAs will be revisedExperiments begin at appropriate time

which will likely be different for each experiment.

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Regulatory Update

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Program Integrity NPRM-1

Notice of Proposed Rulemaking issued June 18, 2010 to improve the integrity of the Title IV student assistance programs. Negotiations held between November 2,

2009 and January 29, 2010 Comment Period Ended August 2, 2010 Final regulations by November 1, 2010

Generally effective July 1, 2011 Applicable for 2011-2012 award year

Possible early or delayed implementation

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Program Integrity NPRM – Part 1

Policy Objectives – Ensuring that only eligible students receive

federal funds.

Protecting consumers (students and families).

Clarifying eligible coursework.

A few others.

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Ensuring that only eligible students receive federal funds. High School Diploma: Requires

institutions to develop and follow procedures to evaluate the validity of a student's high school diploma if the institution or the Secretary has reason to believe that the diploma is not valid or was not obtained from an entity that provides secondary school education.

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Ensuring that only eligible students receive federal funds. Ability to Benefit:

Extends eligibility for federal student aid to students without high school diplomas after they successfully complete six credit hours or 225 clock hours of college work.

Improved oversight of test publishers, test administrators, and testing centers.

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Ensuring that only eligible students receive federal funds. Satisfactory Academic Progress:

Requires a structured and consistent approach to evaluating a student's academic work, while continuing to provide flexibility to institutions in establishing their policies. Some relief to schools that monitor each

payment period.

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Ensuring that only eligible students receive federal funds. Verification:

Replacing the five verification items for all selected applicants with a targeted selection of items based upon each student’s characteristics.

Codifying the Department’s IRS Data Retrieval System Process.

Eliminating the 30 percent institutional verification cap.

Requiring the processing of all changes and corrections to an applicant’s FAFSA information.

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Program Integrity NPRM – Part 1 Protecting consumers.

Misrepresentation: Strengthens the Department's authority to take action against institutions engaging in deceptive advertising, marketing, and sales practices,

State Authorization: Clarifies this important State responsibility.

Incentive Compensation: Removes the "safe harbor" provisions and generally relies on the statutory language for guidance and enforcement.

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Program Integrity NPRM – Part 1 Protecting consumers.

Disclosures regarding “Gainful “Employment: Proprietary institutions of higher education and other institutions with career programs must provide prospective students with each eligible program's graduation and job placement rates, and that those schools provide the Department with information that will allow determination of student debt levels and incomes after program completion.

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Clarifying eligible coursework: Credit Hour: Defines a credit hour and

establishes procedures for accrediting agencies to determine whether an institution's assignment of a credit hour is acceptable.

Retaking Coursework: Allows repeated coursework to count toward enrollment status.

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Program Integrity NPRM – Part 1 Clarifying eligible coursework:

Written Agreements: Limits the amount of a program that can

be provided by another school. Requires disclosures to students and

potential students. Prohibits arrangements between

ineligible institutions that have had their Federal student aid participation revoked.

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Other: Return of Title IV Aid:

Modifies and clarifies the definition of when a student is considered to have withdrawn from a program.

Clarifies the circumstances under which an institution is required to take attendance for the purpose of determining last date of attendance.

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Other: Disbursing Federal Student Aid Funds:

Requires institution to ensure that student has resources to obtain books and supplies by the seventh day of payment period.

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Program Integrity NPRM-2

GAINFUL EMPLOYMENT

NPRM published on July 26, 2010. Negotiations held between November 2,

2009 and January 29, 2010 Comment Period Ended September 9, 2010 Final regulations by November 1, 2010 and in

January, 2011 Some provisions effective July 1, 2011 Some provisions effective July 1, 2012

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Program Integrity NPRM – Part 2Why is the Department regulating to define “gainful employment”

at this time? Programs at for-profit institutions and occupationally specific training

at other institutions must lead to gainful employment in a recognized occupation.

Currently there is no standard to measure “gainful employment”. This NPRM, when finalized, would establish such a standard.

Public comment received last year along with a number of studies, reports, and media reports point to the need to regulate in this area.

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Gainful Employment

• Proprietary Institution of Higher Education and Postsecondary Vocational Institution– All programs must prepare students for

gainful employment in a recognized occupation• Two exceptions

– Program leading to baccalaureate degree in liberal arts (proprietary institution)

– Comprehensive transition program for students with intellectual disabilities (vocational institutions)

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Gainful Employment

• Public/Private Non-profit Institution of Higher Education– Non-degree/certificate programs must

prepare students for gainful employment in a recognized occupation

– Two exceptions• Transfer program• Comprehensive transition program for

students with intellectual disabilities

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Repayment Rate

The percentage of the outstanding principal balance of the Federal loans taken by the academic program’s former students who entered repayment in the previous four years that has been repaid.

Gainful Employment Metrics

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Debt to Earnings Ratio

For the academic program’s completers, the average educational loan payments (Federal, private, and institutional financing plans) as a proportion of the borrower’s income (either discretionary income or average annual earnings). Loan payment amount based on a 10-year amortization schedule at 6.8 percent.

Gainful Employment Metrics

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