U.S. Department of Education

Federal Update

UASFAA Spring ConferenceApril 18, 2013

Title IV Program Budget

2

Title IV Aid Available

FY 2012 FY 2013*(AY 12-13) (AY 13-14)

Pell Grant $35,649,000,000 $36,580,300,000 (Max Award) $5,550 $5,635 FSEOG $929,900,000 $929,900,000FWS $1,161,200,000 $1,348,880,000Perkins $970,700,000 $5,134,400,000TEACH/Presidential Teaching Fellows $154,100,000 $232,600,000Loans $114,674,100,000 $120,822,200,000TOTAL $153,539,000,000 $165,048,280,000

Program

3

* President’s FY 2013 Budget Request

4

President’s Budget RequestFiscal Year 2014• $5,785 maximum Pell Grant• Increase Federal Work Study by $150 million• Reform Campus-Based Aid to encourage value

and completion• Provide a long-term fix for loan interest rates• Expand “Pay as You Earn”• Race to the Top: College Affordability and

Completion - $1Billion

5

Sequestration

Electronic Announcement March 1, 2013

March 15, 2013

6

Federal Pell Grant Program No impact to either 2012-2013 or 2013-

2014 FWS and FSEOG Programs

No impact on 2012-2013 campus allocations

2013-2014 allocations will be reduced Will show in final allocations

Sequestration – TIV Programs

7

TEACH Grant and Iraq-Afghanistan Service Grant Programs Reductions apply only when the first disbursement

of the award is made after March 1, 2013 TEACH Grant awards must be reduced by 12.6%

from the award amount the recipient would otherwise have been entitled

Iraq-Afghanistan Service Grant awards must be reduced by 37.8% from the award amount the recipient would otherwise have been entitled

Sequestration – TIV Programs

8

Federal Direct Loan Programs Direct Subsidized and Unsubsidized loan fees are

increased from 1.0 % to 1.051 % For example, the fee on a $5,500 loan will increase by $2.80 from $55.00 to $57.80

Direct PLUS loan fees (for parent and graduate student borrowers) are increased from 4.0% to 4.204% For example, the fee on a $10,000 PLUS loan will

increase by $20.40 from $400.00 to $420.40

Sequestration – TIV Programs

9

Federal Direct Loan Programs Pending further guidance, schools should continue to

award, disburse, and report using 1% and 4% Both ED’s and schools’ systems (or contractor’s

systems) will need to be modified Will include implementation time for modifications

before the new fee structure will be required Institutions will NOT be liable for the difference

between the 1% and 4% fees and the revised fee amounts If needed, ED work with the students/borrowers

 

Sequestration – TIV Programs

10

Federal Pell Grant Program

2013-2014 Pell Grant Awards GEN-13-06 Maximum Pell award is $5,645 Minimum award amount for a full-time

student is $582 Maximum Pell Grant eligible expected

family contribution (EFC) is 5081

11

Pell LEU LEU – Lifetime Eligibility Used Reduces the duration of a student’s eligibility

to receive Pell Grant to 12 semesters (600% - 6 full Scheduled Awards)

Applies to all students effective with the 2012-13 award year.

Calculation includes all earlier years of the student’s receipt of Pell NO “grandfather” clause

12

Pell LEU Add each annual percentage of student’s scheduled

award that was actually disbursed to the studentOnce LEU reaches 600%, student no longer

eligible for PellMay impact FSEOG eligibility If LEU is more than 500% but less than 600%, partial

eligibility for next award year COD release June 27 will include hard rejects for

disbursements over 600%Edits for 12/13 and beyond

13

• Adding the Pell Lifetime Limit Flag from NSLDS to the ISIR• Adding the Pell LEU percentage to the NSLDS pre-screening data and to the

ISIR

• The Pell LEU % will be a 7-character field with an implied decimal–(example: xxxx.xxx%)

2013-2014 CPS EnhancementsPell Lifetime Eligibility Used (LEU)

14

Pell LEU

• If less than 100% eligibility remaining, handle award like a transfer student

• Pay up to full amount allowed in first payment period/term

• Pay remaining balance in subsequent payment periods

• May round cents but cannot exceed 600%– COD reaching out to those schools with 12/13

disbursements >600% through email campaign• There is no minimum payment

15

16

Pell – LEU (Example)• Student’s annual Pell award is $4800 (100%)

• Student’s current LEU is 523.867% of 600% - Do not round %• Student has 76.133% LEU remaining• 76.133% of the student’s annual award is $3654.384

• Disburse 50% of annual award ($4800) 1st term = $2400 (assuming full-time student)

• Disburse remainder of annual award in second term, up to the remainder of their LEU = $1254.384 (26.133%)

• May round the dollar amount down to $1254 (26.125%) or award the cents $1254.38 (26.133%)

17

COD Reporting Time Frames2/28/13 Federal Register & 3/15/13 Elect. Ann. Pell, IASG, Direct Loans and TEACH disbursement

records (or adjustments) made on or after April 1, 2013, must be submitted to COD no later than 15 days after making the disbursement (or becoming aware of an adjustment)

(Prior to April 1, 2013, disbursement records had to be submitted within 30 days.)

Expect a Federal Register notice for 2013-2014 will require all reporting to be made within 15 days

18

Dear Colleague Letter, GEN-12-18 A student may:

• Decline all or a part of a Pell Grant award • Return, during an award year, all or a part of a

disbursement already made within the same award year

The student must provide a signed, written statement:• Clearly indicating his/her decline/return of Pell Grant funds • Acknowledges that funds may not be available at a later

dateSchool must submit any required adjustment records for the student to the COD System

Declining a Pell Grant

Note: An institution may not package need-based Title IV aid to compensate.

19

2013-2014NSLDS Unusual Enrollment History Flag

“separate from verification”

Unusual Enrollment History Dear Colleague Letter GEN 13-09• New Unusual Enrollment History Flag (UEH Flag) on the

2013-2014 ISIR• ED Reviews Pell Grant disbursements over last 3

completed award years• School may have to review data to determine if valid

reasons exist for student’s unusual enrollment history• School may have to deny further Title IV funds• Not related to verification tracking groups 4 or 5

20

NSLDS adds edits to identify records with unusual enrollment histories and sets an NSLDS Unusual Enrollment History Flag during Pre-screening process

NSLDS Identifies Records

Flag values (N, Blank and 1- 3)

21

Values for the NSLDS Unusual Enrollment History Flag

Unusual Enrollment History

NSLDS Unusual Enrollment History Flag

Description SAR C Flag? SAR Comment

2 Unusual Enrollment History 2 (Possible enrollment pattern problem, school may need to resolve)

Yes 359

3 Unusual Enrollment History 3 (Questionable enrollment pattern, school must resolve)

Yes 360

N Enrollment pattern not unusual (No school action required)

No N/A

22

UEH Flag = N and UEH Flag = 2 UEH Flag value = N No action is necessary • UEH Flag value = 2 Must review student’s enrollment

and financial aid records to determine if, during the 3 award year review period (10/11,11/12, 12/13), student received a Pell Grant at the institution that is performing the review• If so, no additional action is required unless you believe student remains enrolled just long enough to collect student aid funds. In this case, must follow guidance provided for a UEH Flag of 3.

• If not, must follow guidance provided for a UEH Flag of 3.

23

UEH Flag = 3• Must review student’s academic records to determine if

student received academic credit at institutions student attended during the 3 award year period• Identify institutions attended through NSLDS

• Use transcripts or grade reports for each of the previously attended institutions to determine whether academic credit was earned during the award year in which the student received Pell funds

(Academic credit is considered earned if academic records show student completed any credit hours or clock hours.)

24

UEH Flag = 3 • Academic Credit Earned: If determine student earned any academic credit at each of the previously attended institutions during the relevant award years, no further action is required unless institution has other reasons to believe student enrolls just to receive credit balances

• If determine that academic credit was NOT earned at one or more of the previously attended institutions OR the school had reasons to believe student just enrolls for TIV funds, the institution must follow the “Academic Credit Not Earned” guidance

25

UEH Flag = 3

• Academic Credit NOT Earned: If student did not earn academic credit at a previously attended institution, including your school, must obtain documentation from student explaining why failed to earn academic credit

• Must determine whether the documentation supports(1) the reasons given by the student for the student’s failure to earn academic credit; and (2) that student did not enroll only to receive credit balances

• To extent possible, obtain third party documentation to support student’s reasons

26

27

UEH Flag = 3 Denying Eligibility• Institution determines whether circumstances of

failure to receive credit warrant continuation of Title IV Aid – if not, must deny further aid

• Reasons must be documented and maintained • Written denial must be provided to the student • Student must be given opportunity to question

and appeal the decision and information on how to regain eligibility

• Institutional determinations are final and can not be appealed to the Department

UEH Continued Eligibility• Approving Continued Eligibility

• If school approves student’s continued eligibility, may:• Require student to establish academic plan, like (SAP)• Counsel student about the impact of the student’s attendance pattern on future Pell Grant eligibility

28

Regaining Eligibility• School must provide student information on how to regain

Title IV eligibility• Successful completion of academic credit would be the basis for the student’s subsequent request for regaining Title IV eligibility

• Could include meeting requirements of an academic plan• Authority

• 484(a)(4)(A) of the Higher Education Act of 1965• Student signs a Statement of Educational Purpose• Student certified that Title IV aid would only be used to meet

educational costs

29

30

Direct Loans

Public Law 112-141Applies to “new” borrowers on or

after July 1, 2013

31

Subsidized Loan Limitation

• When student has received subsidized loans for 150% of the published time of the academic program – • Student may not receive any additional subsidized loans, and

• Subsidized loans received from July 1, 2013 lose their subsidy

• Special calculation for transfer students • “Likely” that we will prorate for partial loans

32

Subsidized Loan Limitation ExamplesProgram Length Limitation on Subsidized

Loan Eligibility4-Year Bachelor’s Degree 6 Years of subsidized loan

eligibility2-Year Associates Degree 3 Years of subsidized loan

eligibility1-Year Certificate Program 1 ½ Years of subsidized

loan eligibility10 Week Certificate

Program15 Weeks of subsidized

loan eligibility

33

Subsidized Loan Limitation Transfers –

Students maximum time to receive subsidized loans is established based on the length of the program the student is enrolled in

Remaining subsidized eligibility is calculated by subtracting from maximum eligibility for the new program the time the student has already received subsidized loans

34

Subsidized Loan Limitation Transfer Examples –

Student receives two years of subsidized loans while enrolled in a two-year program Student transfers to a four-year BA program Student has four years of remaining subsidized

loan eligibility Student receives three years of subsidized loans

while enrolled in a four-year BA program Student transfers to a two-year AA program Student has no remaining subsidized loan

eligibility

35

Subsidized Loan Limitation FSA will track, calculate, and inform

students and institutions Likely to be codes and comments on

SARs and ISIRs COD editing and enforcement

Schools will need to provide program information to COD & NSLDS

Schools will need to update and correct loan academic year dates and loan period dates

College Choice ToolsKnow Before You Go

Know Before You Owe

36

37

College ScorecardCollege ScorecardAn online tool that will make it easier for students and families to compare colleges by comparing information such as: net price; graduation rates; default rates; student loan debt; and earnings potential

38

Executive Order 13607

Establishing Principles of Excellence for Educational

Institutions Serving Service Members,

Veterans, Spouses and other Family

Members

GEN-12-10EA – 6/29/12

Financial Aid Shopping Sheet

39

Institutional Metrics:Graduation rate under “Student Right-to-Know”

Most recent cohort default rate

Median debt for completers

Loan repayment information

Contact information

Cost of Attendance Elements Grants and Scholarships

Work Options

Loan Options Other Options Including Family Contribution

Student Specific Information:

Net price After Grants

40

Gainful Employment

Programs

Gainful Employment

41

We are currently reviewing the recent legal decision about the Gainful Employment regulations. We are unable to respond to any questions related to Gainful Employment at this time,

but will provide additional guidance in the near future

Electronic Announcement dated July 6, 2012 (GE EA #39)• Provides background on decision• Current school requirements

• Do not have to report annual data for 11/12• Additional GE data not required to included for addingnew GE programs• Disclosure requirements still in affect

Stay tuned to IFAP for Updates!!!!

Electronic Announcement – 11/23/12 (GE EA #42)• By January 31, 2013 all schools must update their

disclosures for each of their GE Programs for the 2011-2012 award year

• Until the ED template is available, institutions must make their GE Program disclosures using an institutionally-determined format

42

GE Disclosure Information

43

Cohort Default Rates

HEOA Changes Increased CDR monitoring period from two to three

years Beginning with the 2009 cohort, the calculation will be:

Borrowers who default in that federal fiscal year or by the end of the next two federal fiscal years.

Establishes a three-year transition period for sanctions On 9/17/12 - released the FY 2010 2-Year CDRs to schools On 9/24/12 - released the FY 2009 3-Year CDRs to schools Draft FY2011 2-yr and FY2010 3-yr released March 2013

44

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100

5

10

15

20

25

17.6%

17.2%

21.4%22.4%

17.8% 15.0%

11.6%

10.7% 10.4%

9.6%

8.8%6.9%

5.6% 5.9%

5.4%5.2%4.5%

5.1%4.6%

5.2%

6.7% 7.0%

8.8%9.1%

Cohort Years

Coh

ort D

efau

lt R

ate

FY 2010 2-Year Official National Student Loan Default Rates 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Issue Date

New

45

Public

Less th

an 2 yr

s

2-3 yr

s

4yrs(

+)

Private

Less th

an 2 yr

s

2-3 yr

s

4yrs(

+)

Propr

ietar

y

Less

than 2

yrs

2-3

yrs

4 yr

s(+)

Foreig

n

Unclassi

fied

0

5

10

15

20

25

11.0%

16.2%

18.3%

7.9% 7.5%

23.1%

14.5%

7.3%

22.7%21.5%

22.9% 23.0%

7.3%

0%

FY 2009 3-Year Official National Cohort Default Rates by Sector

Coh

ort D

efau

lt R

ate

(%)

Sector

Publ

ic

Publ

ic

Publ

ic

Publ

ic

Priv

ate

Priv

ate

Priv

ate

Priv

ate

Prop

riet

ary

Prop

riet

ary

Prop

riet

ary

Prop

riet

ary

Fore

ign

FY 2009 3-year rate is 13.4%

Transition Period

47

Default Sanctions* Default Prevention Plans

1st year CDR is equal to or greater than 30% Establish a default prevention task force; and Develop and submit a default prevention plan to ED

2 consecutive CDRs equal to or greater than 30% Revise and submit default prevention plan ED may require specific adjustments/actions

3 consecutive CDRs equal to or greater than 30% Lose Direct Loan AND Pell Grant eligibility

1 CDR above 40% lose Direct Loan eligibility

48 *ability to appeal/challenge rates

Loan Exemptions

Schools are exempt from waiting 30 days to disburse to first-time, first year borrowers and from providing multiple disbursements for a single term loan if: 3 official default rates below 15% for each of the three most recent fiscal years for which data are available

Official CDRs can all be from the same rate calculation (e.g. all 2-yr rates) or from either the 2 or 3 year rates as long as they are from different fiscal years For example, a school could meet the exception with the following rates – FY09 2-yr; FY10 3-yr rate; FY11 2-yr

49

Default Prevention

ED’s Default Prevention Resource Center http://ifap.ed.gov/DefaultPreventionResourceInfo/index.htmldefaultpreventionassistance@ed.gov.Right-hand side of IFAP home page

Webinar Recordings –Default Prevention ConferenceSeveral different presentationsANN-12-18 (http://ifap.ed.gov/dpcletters/ANN1218.html)

ED Cohort Default Rate contacts (202) 377-4259; fsa.schools.default.management@ed.gov

50

51

studentloans.gov

52

Studentloans.gov has brought ALL FSA loan counseling tools together on one website

• Entrance Counseling Subsidized & Unsubsidized and

Graduate/Professional Student PLUS• Exit Counseling NSLDS will continue to provide detailed Exit

Counseling reports and you’ll continue to obtain demographic and reference information from that website as you do today

• Financial Awareness Counseling

studentloans.gov for 2013-2014

53

New “Repayment Estimator” to the website• On the “My Preferences” screen• Authenticated users will see loan data from NSLDS,

the prospective eligibility of each loan for a particular repayment plan, and estimate the payment for a particular plan based on several factors including…

Loan type Loan balance Income Family size Where you live

studentloans.gov for 2013-2014

54

Federal Registers

Negotiated Rulemaking Hearings• Cash management• State authorization for distance education

programs• State authorization for foreign locations of

domestic institutions• Clock to credit hour conversion• Gainful employment• Campus safety and security reporting• Definition of “adverse credit” for the direct PLUS

loan program

55 April 16 Federal Register

Future Federal Registers

56

Other Student Loan Issues “Naturally readable” Direct Loan regulationsVarious aspects of defaulted borrower processLoan RehabilitationsPerkins loan issues – deferments, enrollment reporting, loan assignments…

Spring 2013 Negotiated Rule-Making• May 1, 2012 Federal Register Notice• Topics – preventing fraud; use of debit cards and other banking mechanisms for disbursing TIV; improve and streamline campus-based programs

Future Federal Registers

57

Teacher Preparation and TEACH Grants Institutional reporting & State accountability –

quality of teacher preparation programs “High Quality” Program and Services

Definitions associated with school eligibility to participate in TEACH Grant

Service and Repayment obligations for TEACH

Federal Register – 9/27/2012

58

• Updated Waivers to HEROES Act– Assist military service members called to active duty or

qualifying National Guard duty – Assist those residing or working in a declared disaster area

tied to a national emergency, war or military operations– Waivers and Modifications include:

- No grant overpayments owed under R2T4- Signed statements of tax extensions- LOA requests to not have to be in writing- Credit balance timeframe met if contact

attempted- Can hold balance up to 45 days

Federal Register – 9/27/2012

59

• Updated Waivers to HEROES Act–Waivers and Modifications include:

- 60 day loan cancellation period- verbal authorizations allowed- various loan statuses and payment

requirements- parental verification & FAFSA signature

requirements

- Effective 9/27/12 through 9/30/17

Federal Loan Programs

60

NPRM – July 17, 2012Final Federal Register - November 1, 2012Effective date – July 1, 2013

Federal Register - December 7, 2012 Early implementation of Pay as You

Earn repayment plan effective 12/21/12

Federal Loan Programs

61

Maintain current Income Contingent Repayment plan (ICR) with adjustments in notification documentation and loan forgiveness process

Create new ICR plan based on future changes to IBR - Pay As You Earn repayment plan Max annual payment capped at 10% of discretionary

income; loan forgiveness after 20 years of qualifying payments; partial financial hardship requirements; adjustments for married borrowers depending on filing status

Electronic application – studentloans.gov

Federal Loan Programs

62

• Modify IBR plan to incorporate SAFRA Act Changes Becomes effective July 1, 2014 Redefine new borrower and partial financial hardship Maximum monthly payment limited to 10% of

discretionary income Loan forgiveness after 20 years of qualifying payments Improve notification requirements Revised repayment requirements for borrowers who

leave IBR

Federal Loan Programs

63

Total and Permanent Disability Discharge Perkins, FFEL and Direct Loans Borrowers representative can be involved in entire

process Borrowers apply for discharge directly to ED who will

notify all lenders ED to create an OMB form for reporting earnings Ensure application process for veterans with VA

documentation similar to non-veteran process Revise provisions to require payments by borrowers

after discharge is granted be returned to the borrower

Federal Loan Programs

64

Total and Permanent Disability Discharge Permit a TPD discharge based on a borrower’s

Social Security Administration (SSA) notice of award for Social Security Disability Insurance (SSDI) benefits or Supplemental Security Income (SSI) benefits IF classified as permanently impaired—medical improvement not expected (reviewed by SSA every 5-7 years)

Borrowers still subject to the three-year discharge review that is currently in place

65

Additional DCLs &

Announcements

66

State Authorization

• GEN-13-4 34 CFR 600.9(a) and (b)• Schools must be legally authorized by the state

to provide postsecondary education• States must provide oversight and approvals that

meet regulations• States must have a process to review and act

upon complaints • States that were not able to provide appropriate

authorizations were given until July 1, 2013

Dear Colleague Letters• GEN-13-07– Net Price Calculator

• Q & As; References• GEN-13-02 – Direct Loan Funds

• inadvertent overborrowing; failure to attend• GEN-13-01 – Only two types of DCLs (GEN & ANN)• GEN-12-19 – New Perkins MPN

• Must use by January 1, 2013

67

Electronic Announcements

68

• 3/25/13 - Transition to New NSLDS Enrollment Reporting File Layouts and Retirement of SSCR Software

• 3/8/13; 3/12/13 – changes to log-in process for specific ED systems including rules of behavior and annual security training and COD access criteria

• 1/18/13 – ED social media tools to promote FAFSA completion

• 1/18/13 – enhancements to MyStudentData download on NSLDS

69

Training & Resources

Training• 2012 FSA Conference

• http://fsaconferences.ed.gov/• Download presentations; view recorded sessions

• FSA Fall Webinar Series – October 2012• R2T4 Modules, R2T4 Clock Hours, Clock Hour Issues,

Campus-Based Programs, future Q & A session• ANN-12-21 (recordings will be posted to IFAP)

• Fundamentals of Federal Student Aid Administration• ANN-12-22 • New requirements – CEO/owner must attend entire training;

to register participants must complete online training

7070

Resources• 2013 BLUE BOOK

• http://ifap.ed.gov/ifap/BlueBook.jsp?year=2013• Designed to provide guidance to business and fiscal officers on accounting, recordkeeping, managing, and reporting federal student aid programs

• IFAP.ed.gov website • “My IFAP” – left-hand side

• Campus-Based Call Center• 877-801-7168; cbfob@ed.gov

7171

72

Training EvaluationTo ensure quality training, we ask all participants to

complete an online evaluation for each session• https://s.zoomerang.com/s/DeborahTarpley

• Evaluation form is specific to Deborah Tarpley• Feedback is a tool to help us improve our training and to

listen to our customers• Additional comments regarding training can be directed to

mark.gerhard@ed.gov

Contacts• Denver School Participation Team

• Main Number: 303-844-3477• Leave a message, it will get routed

• Denver Training Officers• Margaret Day – 303-844-3146• Rick Renshaw – 303-844-0433• Deborah Tarpley - 303-844-3683

• Email – firstname.lastname@ed.gov

7373