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									  Federal Update

KASFAA Spring Conference
 Bowling Green, Kentucky
     April 11-13, 2007
 Presented by Greg Martin
    2007-08 Pell Grant Payment
            Schedules
•   Maximum award is $4,310
•   Minimum award remains $400
•   Maximum Pell eligible EFC is 4110
•   Published in DCL P-07-01
     Direct Grad-PLUS Loan
           Deferments
• Direct PLUS loans for grad./professional
  students will be placed into in-school
  deferment status based on enrollment
  reporting information
  – Students continuing at least ½ time
    enrollment automatically receive in-school
    deferments that remain in effect until
    completion date reported by school
           Preferred Lenders
• Preferred Lenders Lists are allowed
• No Automatic Referrals
• Must process any loan request made by a student
  or parent regardless of lender
    – See GEN-07-01
• May not have unreasonable delays
• Publications, scripts and staff training should
  comply
• Violations could bring sanctions
• Does not apply to FFEL/Direct Loan choice
           Preferred Lenders
• Preferred Lenders Lists are allowed
• No Automatic Referrals
• Must process any loan request made by a student
  or parent regardless of lender
    – See GEN-07-01
• May not have unreasonable delays
• Publications, scripts and staff training should
  comply
• Violations could bring sanctions
• Does not apply to FFEL/Direct Loan choice
          Alternative Loans
• Alternative loans must be included as
  “estimated financial assistance” if
  enrollment is a condition for the loan
  – Does not matter where loan proceeds are
    sent or whether school certified enrollment
  – May replace EFC
  – Think about it like an outside scholarship
      Training Opportunities
• Spring Training (ACG/SMART Grant)
  – West Virginia State University, Institute, WV
    (Charleston area)
     • May 9, 2007
  – Tennessee Tech University, Cookeville, TN
     • June 5, 2007
  – Univ. of Southern Indiana, Evansville, IN
     • April 18, 2007
  – Refer to DCL ANN-07-04 for information and a link
    to the registration site
      Training Opportunities
• R2T4 software training
  – On-line, instructor-led
  – Includes changes to the R2T4 calculation
    resulting from HERA
  – 90 minute sessions
  – Refer to DCL ANN-07-02 for registration
    information
      Training Opportunities
• Applicant data resolution training
  – On-line, instructor led
  – Resolving student application data rejects
    and use Department’s web-based systems
    to correct errors
  – 90 minute sessions
  – Refer to DCL ANN-07-03 for registration
    information
     Negotiated Rulemaking
• Four negotiating teams
  – Loans
  – ACG/National SMART
  – General Provisions
  – Accreditation
     Negotiated Rulemaking –
           Loan Issues
•   Entrance counseling for Grad PLUS
•   Identity theft
•   Use of preferred lenders
•   Prohibited inducements
•   Economic hardship
•   Retention of disbursement records
    supporting MPNs
   Negotiated Rulemaking –
         Loan Issues
• Certification of E-signatures on MPNs
  assigned to ED
• Use of true and exact copy of death
  certificates for death discharge
• Retroactive discharge for permanent ant
  totally disabled borrowers
• Lender NSLDS reporting timeframes
    Negotiated Rulemaking –
      Perkins Loan Issues
• Assignment of defaulted loans
• Eligibility requirements for child and family
  service cancellation
• Definition of “reasonable and affordable”
  collection costs
    Negotiated Rulemaking –
     ACG/National SMART
• Rigorous secondary school programs
  – Who defines rigor?
• Mandatory school participation in ACG/National
  SMART
• Requirement that Pell Grants and ACG/National
  SMART be disbursed at the same institution when
  awarded in the same term
• Academic year progression
    Negotiated Rulemaking –
     ACG/National SMART
• Grade point average
   – Transfer students; coursework; timing of
     calculation; eligibility for disbursement
• Interpretation of previously enrolled
   – College credits earned while in high school;
     treatment of AP/IB credits
• Clarify meaning of successful completion of
  rigorous program of study means
• ED monitoring disbursements of student awards
  by academic year
    Negotiated Rulemaking –
      General Provisions
• Consistent enrollment status definitions for all
  Title IV programs
• Consistent definitions of undergraduate and
  graduate student for all Title IV programs
• Define independent study
• Treatment of FFEL and DL funds when a student
  withdraws before beginning class – make
  consistent with other programs
   – Eliminate the single disbursement requirement for
     Perkins and FSEOG
    Negotiated Rulemaking –
      General Provisions
• Nonstandard term and nonterm programs
   – Use of completion of half the weeks of
     instructional time for timing of loan disbursements;
     loan eligibility for nonstandard term programs;
     Require institutions to use consistent
     disbursement periods
• Cash Management
   – Recovery of stale dated checks; student/parent
     permission for electronic disbursements;
     Affirmative confirmation of a loan
• Eliminate requirement for written notification and
  student confirmation of a post-withdrawal
  disbursement of a grant made directly to student
    Negotiated Rulemaking –
      General Provisions
• Allow standard term programs with monthly starts
  to use Pell Formula #1
• Eliminate double pro ration for Pell Grant
  payments for clock and credit hour programs w/o
  terms
• Pro rate loans for remaining portion of a program
  by standard 50% instead of exact ratio
• Allow school to credit student’s account for minor
  prior year charges w/o authorization
• Allow school to certify a loan for a transfer student
  for remaining portion of loan not used a first
  school and then certify a new loan for the new
  academic year
      Negotiate Rulemaking –
          Accreditation
•   Due Process
•   Substantive change
•   Monitoring
•   Measures of student achievement
•   Transfer of credit/acceptance of credentials
•   Definition of terms – direct assessment
     Negotiated Rulemaking
          Information
• IFAP under Law & Regulation – select
  2006-2007Negotiated Rulemaking for
  Higher Education
  – Select by team e.g., Accreditation Team
  – Obtain list of negotiators, draft agenda,
    summary of sessions
  – Print proposed regulatory language
     • Informative “heads-up” as to what MAY be
       coming
        Tentative Calendar
• Sessions: December 2006, February, March
  and April 2007
• NPRM: June 2007
• 60-day comment period
• Final rules: November 1, 2007
• Effective date June 1, 2008 with possible
  early implementation
Fiscal Year 2008
Budget Proposals
  FY ’08 Title IV Budget Priorities
                Federal Pell Grant
• Increase maximum Pell Grant to $4,600 for
  2008-09 and to $5,400 by 2012-13.

• Pell Grants available year-round at eligible 2
  year and 4 year degree granting institutions
• Pell Grant eligibility limited to the equivalent
  of 16 semesters
• Eliminate the Pell Grant award rule related
  to tuition sensitivity
 FY ’08 Title IV Budget Priorities
     ACG and National SMART Grants

• Increase Academic Competitiveness Grants
  (ACG) awards from –

    – $750 to $1,125 for first-year students

    – $1,300 to $1,950 for second-year
      students
 FY ’08 Title IV Budget Priorities
                Eligibility/EFC
• Exclude amounts held by students and
  parents in 529 savings and investment
  accounts from the EFC formula
• Implement a consent-based approach to
  matching FAFSA data with Federal tax data
     –Lots more do be worked out
     –Pilot first
     –??? Award Year
  FY ’08 Title IV Budget Priorities
               FFEL/Direct Loans

• Increase annual loan limits for upper
  division undergraduates from $5,500 to
  $7,500

• Increase aggregate loan limits for all
  students
     – No amounts specified
 FY ’08 Title IV Budget Priorities
         Funding for Increased Aid
• Eliminate new funding for –
     – FSEOG
     – Perkins Loan
     – LEAP
• Recall Federal share of Perkins Loan revolving
  fund and outstanding loan portfolio.
     – Details being evaluated
  FY ’08 Title IV Budget Priorities
           Funding for Increased Aid
• lender fee from 0.5 percent to 1 percent Reduce
  interest subsidies to lenders by 0.5 percent (50
  basis points)
• Reduce default insurance from 97 percent
  to 95 percent
• Reduce guaranty agency default collection
  payments
• Move guaranty agency account
  maintenance fees to a unit cost basis
• Increase consolidation.
          FAFSA4caster!!!
• Announcing FAFSA4caster
  – Tool to help HS Juniors and their families
    prepare for college
  – Available April 1
    • Visit www.FederalStudentAid.ed.gov
  – See Electronic Announcement on March
    21
 Higher Education
Reconciliation Act of
       2005
     (HERA)
      FFEL and Direct Loans
• Loan limits in FFEL and Direct Loans: annual
  base limits increased for - -
   – First year students from $2,625 to $3,500
   – Second year students from $3,500 to $4,500
• Increases annual additional unsub for - -
   – Graduate students from $10,000 to $12,000
   – Prep for grad program from $5,000 to $7,000
   – Teacher certification from $5,000 to $7,000
• Aggregate limits are not changed
• Effective for loans first disbursed on or after July
  1, 2007
Calculation of EFC 2006-2007
• Simplified Needs Test and Auto Zero EFC
  – Increases to $20,000 the threshold under
    which a family would automatically have an
    EFC of zero
  – Eliminates consideration of dependent
    student’s tax return for both SNT and Auto-
    Zero EFC
  Calculation of EFC 2006-07
• Simplified Needs Test and Auto Zero EFC
  – Tax return alternative for parents or
    students that received, during the base
    year, benefits from a Federal means-tested
    program such as supplemental security
    income, food stamps, free an reduced
    school lunch, TANF and WIC
  Calculation of EFC 2006-07
• Active Duty Military
   – Adds active duty military to the criteria that makes
     a student independent
      • Action: Dependency Override
• 529 Tuition Savings Plans
   – Treats all 529 Pre-Paid and Tuition Savings Plans
     as assets of the owner, unless the owner is the
     dependent student
      • Action: Update assets / do not include as EFA
• Small Businesses
   – Excludes small-businesses from assets
      • Action: Update Assets
Calculation of EFC 2007-2008
• Income Protection Allowance
  – Dependent student increased to $3,000
  – Independent students w/o dependents other than
    a spouse increased to $6,050
     • Applies to single student and married student with both
       spouses enrolled
  – Independent Students w/o dependents other than
    a spouse increased to $9,700
     • Applies to a married student where only one spouse is
       enrolled
  – Independent students with dependents other than
    a spouse IPA table increased by 5% for 2007-
    2008
Calculation of EFC 2007-2008
• Asset assessment rates decreased
   – Independent students w/o dependents other than
     a spouse
      • Reduces asset contribution rate from 35% to 20%


   – Independent students with dependents other than
     a spouse
      • Reduces asset contribution from 12% to 7%
   – Dependent students
      • Reduces asset contribution from 35% to 20%
      New Grant Programs
• Academic Competitiveness Grant (ACG)
• National Science and mathematics to Retain
  Talent Grant (National SMART Grant)
   Authorization and Funding
• Funding for these programs is not subject to
  the annual appropriations process
  – 2006-07     $790 million
  – 2007-08     $850 million
  – 2008-09     $920 million
  – 2009-10     $960 million
  – 2010-11     $1.01 billion
      Rules and Regulations
• Interim Final Regulations for the 2006-07 award
  year published on July 3, 2006
   – Invitation to comment through August 17, 2006 for
     possible changes for 2007-08
   – Received 80 comments
• Final Regulations for the 2007-2008 award year
  and beyond published on November 1, 2006
   – Institutions may implement changes made in the
     Final Regulation for the 2006-2007 award year
     Rules and Regulations
• One Significant Change
  – July 3 interim rule required student to have
    received a Pell Grant in the same payment
    period (e.g., term) to receive an ACG or
    National SMART Grant
  – November 1 final rule requires student to
    have received a Pell Grant sometime in the
    same award year to receive an ACG or
    National SMART Grant
   Institutional Responsibility
• Institutions are responsible for implementing the
  new programs within the guidance provided
• The Secretary recognizes that institutions face
  significant challenges in implementing the
  programs with almost no lead time for the 2006-07
  award year
• These facts will be considered during reviews of
  the institution’s implementation of the programs
 Programs Are Similar in Some
            Ways
              Student Eligibility
 U.S. Citizen Only – Eligible Non-Citizens Do Not
                      Qualify
  Pell Grant Recipient During Same Award Year
    Full-time Enrollment for Payment Period

           Enrolled in Degree Program
      Progression by Student Academic Year
Only One Scheduled Award for Each Academic Year
            ACG                       National SMART
1st & 2nd academic years of a    3rd & 4th academic years of a
two or four year degree          four year degree program.
program.

Requires completion of           Requires student to be in a
rigorous high school program     designated major.
of study.
1st Academic Year- $ 750         3rd Academic Year- $4000
2ndAcademic Year- $1300          4th Academic Year- $4,000

GPA of at least 3.0 as of the    GPA of at least 3.0 at each
end of 1st academic year only.   disbursement.
      Duration of Student Eligibility
• For ACG, students are restricted to:
   – One grant for the student’s first academic year.
   – One grant for the student’s second academic year.


• For National SMART Grant, students are restricted
  to:
   – One grant for each of the student’s third and fourth
     academic years.
       ACG Eligibility Requirements
• 1st year students
   – May not have been previously enrolled while in
     high school as a regular student in an ACG
     eligible program.
   – Have completed a rigorous secondary school
     program of study after January 1, 2006.
• 2nd year students
   – Have completed a rigorous secondary school
     program of study after January 1, 2005.
   – Have a 3.0 or higher GPA at the end of 1st year.
  ACG: Options for Rigorous Program

1. State Designated Program –
   State Submitted Program.
   An advanced or honors program established by
    a state and in existence for the 2004-2005 or
    2005-2006 school year.
   State Scholars Initiative (SSI) Programs.
   ACG: Options for Rigorous Program

2. A set of courses as outlined in the final regulations.

3. Completion of at least two Advanced Placement
   (AP) courses with passing test score of 3 or two
   International Baccalaureate (IB) courses with
   passing test score of 4.
    ACG: Options for Rigorous Program
              Set of Courses
•   4 years of English.
•   3 years of math –
     – Two of which must be algebra I and above.
•   3 years of science –
     – Two of which must be biology, chemistry, or
       physics.
•   3 years of social studies.
•   1 year of a language other than English.
  ACG: Documenting Rigorous Program
• Institutions are responsible for determining the
  eligibility of students who self-identified on at least
  the standard(s) selected by the student.
• Institutions are encouraged to identify all eligible
  students based on records they have (e.g., high
  school transcripts, test scores).
• Institutions are also responsible for determining
  eligibility if student informs the institution directly.
  ACG: Documenting Rigorous Program
• Documentation from cognizant authority.
   – For home schooled students, the parent or
     guardian is the cognizant authority.
   • For transfer students, an institution may rely on
     another school’s determination that student
     completed a rigorous program.
        – NSLDS will store the data.
          ACG: Grade Point Average
• For second academic year, student must have a
  cumulative Grade Point Average (GPA) of at least 3.0
  from the first academic year.
   – GPA determined one time, after completion of
     first academic year.
• For a student who transfers after completing first
  academic year, the new institution must calculate
  GPA using the grades from all coursework accepted
  from prior schools.
             National SMART Grant
              Major Fields of Study
   Computer Science                    Mathematics
   Engineering                         Physical Sciences
   Technology                          Designated Critical
                                         Foreign Languages
   Life Sciences

Identified by CIP* code in DCLs GEN-06-06 and
GEN-06-15
*Classification of Instructional Program
            National SMART Grant
             Major Fields of Study
• Requires that a recipient –
   – Declare an eligible major; or
   – Show intent to declare eligible major if school policy
     does not yet allow a major to be declared.
• Institution must have a process for monitoring that
  student is making progress toward completion of the
  program with that eligible major.
            National SMART Grant
             Grade Point Average
• For each payment period, a student must have a
  cumulative grade point average (GPA) of at least 3.0
  that:
    – Includes all coursework required for degree in
      approved major.
    – Is calculated through last completed payment
      period.
    – Is reviewed prior to each disbursement.
                 Both Programs
                Need-Based Grants
• Total of ACG/National SMART Grant, EFC, Pell,
  and all estimated financial aid cannot exceed cost of
  attendance.

   – ACG and National SMART Grant may not replace
     EFC in need equation.

   – To avoid an overaward, an institution may reduce
     other aid, including FSEOG, or it may reduce the
     ACG or National SMART Grant.
                 Both Programs
          Determining Enrollment Status

• Schools must have the same policy for determining
  enrollment status for Pell Grants and for ACGs and
  National SMART Grants.

• Schools must use same recalculation policy, such as
  recalculation date (census date), that is used for Pell
  Grants.
                  Both Programs
                  Academic Year
Student’s progress and duration of eligibility in an
eligible program is measured in Title IV academic
years. A Title IV academic year is defined in the HEA
to be –
A minimum of either:
  • Twenty-four semester credit hours, or
  • Thirty-six quarter credit hours, or
  • 900 clock hours.
             --AND—
  • A minimum of 30 weeks of instructional time (26
    weeks for clock hour programs).
   Second and Fourth Academic Year
For the 2006-2007 and 2007-2008 Award
 Years –
• For a student enrolled in an associate’s degree
  program, the second academic year ends when the
  student has completed the program.
• For a student enrolled in a bachelor’s degree
  program, the fourth academic year ends when the
  student has completed the program.
See DCL GEN-06-18
Academic Year - Weeks of Instruction
     For the 2006-2007 and 2007-2008
    award years, an institution with a 30
     week academic year and standard
          terms ( Formula 1) may –
 Determine the actual           Assume that there
  number of weeks of              were 30 weeks of
  instructional time that - OR - instructional time for
  were included for the           each increment of
  student to complete the         credit hours that
  number of credit hours in       comprises the
  the institution’s Title IV      institution’s Title IV
  academic year definition.       academic year
                                  definition.
     Academic Year – Weeks of Instruction
May exercise option –
• On a student by student basis.
• For same student for different terms.
• For transfer credits differently than for home earned
  credits.
NOTE: An institution must determine the actual
number of weeks of instructional time for a student
who requests that such a determination be made or
questions whether he or she has completed an
academic year.
See DCL GEN-06-18
Comments regarding these materials or
my performance should be directed to:
            Jo Ann Borel
           202-377-3930
        Joann.borel@ed.gov

								
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