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U.S. Department of Education Federal Update

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Title: U.S. Department of Education Federal Update


1
U.S. Department of Education Federal Update
  • Dan Klock
  • Federal Student Aid

1
2

Todays Topics
  • Appropriations and Budget
  • Legislative Update
  • Cohort Default Rates
  • Direct Loan Transition
  • IRS Data Retrieval
  • Two Pells In One Award Year
  • Regulatory Update
  • Other

2
3
Appropriations and Program Budget
3
4
Title IV Appropriations
4
5
Title IV Aid Available
5
6
Legislative Update
6
7
Legislative Update
7
8
FFEL/Direct Loan Cohort Default Rates
8
9
National Student Loan Default Rates
9
10
Pennsylvania Default Rates (FY 2006 - FY 2008)
  • 2006 2007 2008
  • Rate X.X X.X X.X
  • Borrowers in
  • Repayment 86,788 96,517
  • Borrowers in
  • Default 3,212 4,056
  • 10

11
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

12
What is the CDR Calculation?
  • Currently, a schools cohort default rate is
  • The percentage of the number of the schools
    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.

13
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
355 5000 .071 or 7.1
605 5000 .121 or 12.1
14
Transition Period
15
Direct Loan Transition
15
16
Direct Loan Transition
  • Legislation Health Care and Education
    Reconciliation Act of 2010
  • 100 Direct Loans July 1, 2010 and forward
  • Earliest disbursement date drives remaining FFELP
    activity

16
17
Direct Loan Transition
  • 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

17
18
Direct Loan Transition
  • 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

18
19
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

19
20
Direct Loan Transition
  • Contracted with 4 additional servicers
  • ACS (current servicer)
  • Nelnet
  • Sallie Mae
  • Great Lakes Education Loan Services
  • AES/PHEAA
  • Will service borrowers onlyno origination
    responsibility

20
21
Direct Loan Transition
  • 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

21
22
IRS Data Retrieval
22
23
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.

23
24
Option to Access IRS Information
24
25
Get My Federal Income Tax Information
25
26
Federal Income Tax Information Provided
26
27
27
28
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.

28
29
IRS Request Flag Values
Student Parent IRS Request Flag Description
00 IRS data request for the student/parent was not submitted to IRS (default value)
01 IRS 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
29
30
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.

30
31
Enhancements
  • Add data retrieval process to Corrections on the
    Web
  • Add Spanish language version or enable Spanish
    FOTW filers to use retrieval process

Under Construction!
31
32
Two Pells in an Award Year
32
33
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

33
34
Negotiated Rulemaking
  • 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

34
35
Pell Constants
  • Unchanged by Two Pells
  • Scheduled Award
  • Is the amount that a full-time student would
    receive for a full academic year based on the
    students EFC and COA.
  • Prorated by payment period based on hours and
    weeks of instructional time attended.
  • Payment periods
  • Payment for a payment period calculations

35
36
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.

36
37
Eligible Student
  • Is enrolled at least as a half-time student
  • Is enrolled in an eligible program leading to a
    bachelors 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 lengthin both hours and weeks of
    instructional time.

37
38
Eligible Student
  • Is enrolled in credit or clock hours attributable
    to the students 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

38
39
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.

39
40
If Law Had Not Changed - Semester Example
Student may only receive up to ONE Scheduled
Award within an Award Year. Assume students
2009-2010 Scheduled Award is 5,350 and will be
5,550 for 2010-2011.
Spring 2010 2,675
Fall 2009 2,675
100 2009-10 AY
Summer 2010 0
2009-10 Award Year
Summer 2010 2,775
Fall 2010 2,775
Spring 2011 0
100 2010-11 AY
2010-11 Award Year
40
41
New Law - Semester Example
Student may receive up to TWO Scheduled Awards
within an Award Year. Assume students
2009-2010 Scheduled Award is 5,350 and will be
5,550 for 2010-2011.
Spring 2010 2,675
Fall 2009 2,675
Summer 2010 2,675
150 2009-10 AY
2009-10 Award Year
Fall 2010 2,775
Spring 2011 2,775
Summer 2011 2,775
150 2010-11 AY
2010-11 Award Year
41
42
New Law - Semester Example

Student may receive up to TWO Scheduled Awards.
Students Scheduled Award is 5,350 for the Award
Year.
Fall 2009 2,675
Summer 2010 2,675
Summer 2009 2,675
Spring 2010 2,675
2009-10 Award Year
200 2009-10 AY
42
43
Other Information
43
44
Awards for Children of Deceased Military Service
Members Military
  • For 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.

44
45
Department of Defense Match
  • In May 2010, began matching applicant records in
    CPS against DoD file
  • 2009-10 applicants
  • Calls and e-mails to FAAs
  • Letters to students
  • 2010-11 applicants
  • New DoD Flag set on ISIRs
  • Letters to students
  • To ensure all eligible students are awarded aid
    appropriately, FAAs must pay attention to new
    ISIR flag
  • DCLs posted on IFAP provide operational guidance

45
46
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

46
47
Professional Judgment
  • Authority and guidance
  • Spelled out in Sec. 479A of HEA
  • No regulations
  • Department is prohibited from regulating
  • DCLs offer clarification on specific issues

47
48
Professional Judgment
  • 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

48
49
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.

49
50
Experimental Sites Initiative
  • Received100 suggestions for possible experiments
  • Some duplicates or close enough
  • Some schools can do under current rules
  • Some out of bounds
  • Staff Reviewed about 35
  • Staff will recommend six to ten

50
51
Experimental Sites Initiative
  • Second Federal Register Notice
  • Will describe approved experiments
  • Will ask schools to volunteer
  • ED will determine which schools are approved
  • PPAs will be revised
  • Experiments begin at appropriate time which will
    likely be different for each experiment.

51
52
Regulatory Update
52
53
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

53
54
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.

54
55
Program Integrity NPRM Part 1
  • 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.

55
56
Program Integrity NPRM Part 1
  • 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.

56
57
Program Integrity NPRM Part 1
  • 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.

57
58
Program Integrity NPRM Part 1
  • 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 students characteristics.
  • Codifying the Departments IRS Data Retrieval
    System Process.
  • Eliminating the 30 percent institutional
    verification cap.
  • Requiring the processing of all changes and
    corrections to an applicants FAFSA information.

58
59
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.

59
60
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.

60
61
Program Integrity NPRM Part 1
  • 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.

61
62
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.

62
63
Program Integrity NPRM Part 1
  • 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.

63
64
Program Integrity NPRM Part 1
  • 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.

64
65
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

65
66
Program Integrity NPRM Part 2
  • Why 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.

66
67
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)

67
68
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

68
69
Gainful Employment Metrics
Repayment Rate The percentage of the outstanding principal balance of the Federal loans taken by the academic programs former students who entered repayment in the previous four years that has been repaid.
69
70
Gainful Employment Metrics
Debt to Earnings Ratio For the academic programs completers, the average educational loan payments (Federal, private, and institutional financing plans) as a proportion of the borrowers income (either discretionary income or average annual earnings). Loan payment amount based on a 10-year amortization schedule at 6.8 percent.
70
71
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