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Federal Update NYSFAAA Federal Update NYSFAAA Nautochia Webb April 13, 2012 1.
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Transcript of Federal Update NYSFAAA Federal Update NYSFAAA Nautochia Webb April 13, 2012 1.
Federal UpdateFederal Update NYSFAAA NYSFAAA
Nautochia Webb April 13, 2012
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White House Student Loan Initiatives
Budget Act of 2011
Consolidated Appropriations Act – 2012
Regulatory Update: Program Integrity and Gainful Employment
Today’s Topics
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White House Student Loan Initiatives
Special Direct Consolidation Loans
Regular Direct Consolidation Loan
Borrowers with any federal student loan FFEL, Direct Loan, Perkins, HHS
Direct Consolidation Loan Underlying loans paid off New Repayment Period Interest Rate – Fixed
Weighted average rounded up to the next 1.8 percent
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Special Direct Consolidation LoanJanuary 17 through June 30, 2012.Only for “Split Borrowers”
Loans held by ED and FFEL lenderED Held Loans –Direct Loans and ‘PUT’
FFEL LoansOnly the commercial FFEL to be consolidated Underlying loans paid off Underlying loans maintain identity
Same terms, conditions, dates
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Special Direct Consolidation Loan
Benefits –Single holder/servicer/bill/paymentLoans maintain terms and conditionsReduction in interest rate of 0.25%
Additional 0.25% reduction for EFTLoans eligible for Public Service Loan Forgiveness
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”Pay As You Earn”Income Driven Repayment
Plans
Income Based Repayment (IBR) Plan
Statutory - FFEL and Direct LoanCurrent Law –
Maximum annual payment amount is 15% of discretionary income.
Remaining balance forgiven after 25 years. New Law (SAFRA) – Effective 2014
Maximum annual payment amount is 10% of discretionary income
Remaining balance forgiven after 20 years.
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Budget Control Act of 2011
(BCA)
BCA - Subsidized Loans
Elimination of Subsidized Loans for Graduate Students Effective for loans made for loan periods
beginning on or after July 1, 2012. Subsidized Loans for loan periods
beginning before July 1, 2012 remain unchanged.
COD will enforce.
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BCA - Repayment Incentives
Elimination of Direct Loan Incentives Terminates repayment incentives to
encourage on-time repayment of loans. Effective for loans first disbursed on or after
July 1, 2012. COD will enforce. Allows interest rate reduction to borrowers
who repay electronically.
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Consolidated Appropriations Act of 2012
Auto-Zero EFC Income Threshold
Reduces the income threshold for an automatic zero expected family contribution (EFC) from $30,000 to $23,000.
For the 2012-2013 award year was scheduled to be $32,000.
FAFSA on the Web and CPS have been updated, and both began 2012-2013 FAFSA processing using $23,000 as the auto-zero EFC threshold.
Ability-to -Benefit (ATB)
Eliminates Title IV eligibility for students without a high school diploma (or equivalent).
Students who first enroll in a program of study on or after July 1, 2012.
Exceptions for Home schooled students
Ability-to -Benefit (ATB)
Students who are or were, enrolled in a Title IV eligible program anytime may continue to qualify under one of the ATB alternatives – Passing an independently administered,
approved ATB test. Successfully completing at least six credit
hours or 225 clock hours.
2012-2013 Pell Grant Amounts
2012-2013 Pell maximum award - $5,550 2012-2013 Pell minimum award - $550. Maximum Pell eligible EFC – 4995 Eliminates eligibility of a student who was
eligible for between five and ten percent of maximum award.
2012-2013 Payment schedules posted IFAP on January 12, 2012.
Pell Grant Duration of Eligibility
Reduces the duration of a student’s eligibility to receive Pell Grant from 18 semesters (or its equivalent) to 12 semesters (or its equivalent).
Applies to all students effective with the 2012-13 award year.
Calculation includes all earlier years of the student’s receipt of Pell.
Pell Grant Duration of Eligibility
Calculate the equivalency by adding together each of the annual percentages of a student’s scheduled award that was actually disbursed to the student. LEU – Lifetime Eligibility Used Once total reaches 600%, student no
longer eligible. If total more than 500% but less than
600%, partial eligibility for next award year.
Pell Grant Duration of Eligibility
Example – Student’s Scheduled Award was $5,550,
but only received $2,775 because only enrolled for one semester, will have used 50% of that award year’s scheduled award.
Student who was enrolled three-quarter time for the entire award year would have used 75% of his scheduled award.
This student has used 125% of the total 600%.
Grace Period Interest Subsidy
Temporarily eliminates the interest subsidy on Direct Subsidized Loans during the six month grace period.
Applies to new Direct Stafford Loans for which the first disbursement is made on or after July 1, 2012, and before July 1, 2014.
FFEL Lender SAP Payments
Allows FFEL lender to choose the base on which special allowance payments (SAP) are calculated, from Commercial Paper (CP) to the London Inter Bank Offered Rate (LIBOR).
Effective for loans first disbursed on or after January 1, 2000.
By April 1, 2012, lender must inform ED of choice.
No impact on students, borrowers or schools.
Other Legislative Loan Changes
Interest Rates
CCRAA reduced the interest rate on subsidized loans made to undergrads in stages from 6.8 % to the current 3.4 %.
The reduced rates end on July 1, 2012. Interest rate on subsidized loans first
disbursed on or after July 1, 2012 to undergraduate students will be 6.8 percent.
Same rate as on subsidized loans made to graduate students and to all unsubsidized loans.
Loan Limits
$2,000 additional Direct Unsubsidized Loan funds for dependent students under the ECASLA remains available. Some confusion because of the June 30,
2011 termination of the temporary special 90/10 treatment of these additional unsubsidized loan amounts.
Regulatory Update Program Integrity
Regulations
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Regulatory Activity
Program IntegrityOctober 29, 2010: Effective July 1, 2011June 13, 2011: Effective July 1, 2012
Foreign SchoolsNovember 1, 2010:Effective July 1, 2012
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October 29 Regulatory Topics
Definition of a Credit Hour Return of Title IV Funds (R2T4) State Authorization Satisfactory Academic Progress Ability-to-Benefit Incentive Compensation Written Agreements Between Schools Misrepresentation Disbursements for Books and Supplies
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October 29 Regulatory Topics
High School Diploma Verification Gainful Employment
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Federal Update END
Verification
Communications NPRM: June 18, 2010
Final regulations: October 29, 2010
Effective with the 2012-2013 Award Year
Federal Register Notice: July 13, 2011
Dear Colleague letters GEN-11-03, February 2011 (IRS) GEN-11-13, July 2011 (Verification)
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Highlights of New Regulations
Eliminates $400 tolerance; replaces with $25 tolerance for any item.
Must report all changes, not just those that impact Pell
Eliminates the 30 percent institutional verification cap
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Highlights of New Regulations
Allows for changes in marital status only if it would change dependency status. School discretion Must update other information
Family size Spouse’s income
Student may make change but reject transaction. FAA Override
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Highlights of New Regulations
Allows the Secretary to include any item from the FAFSA for possible verification.
Replaces the five verification items for all selected applicants with a targeted selection of items based upon each student’s characteristics.
No customization for 2012-2013.
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2012-13 Verification Items
Annual Federal Register notice— Items to verify Acceptable documentation
Federal Register Notice: July 13, 2011
DCL GEN-11-13, July 2011
2012-13 Verification Items
All Applicants—Number in Household –Not required if:Dependent student household size
reported is two and the parent is unmarried or three if the parent is married.
Independent student household reported is one and the applicant is unmarried or two if the applicant is married.
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2012-13 Verification Items
All Applicants — Number in College
Not required if reported is one.
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2012-13 Verification Items
All Applicants — Food Stamps (SNAP), if receipt reported
on FAFSA—Documentation is signed statement
from independent student or parent of dependent student stating that –Someone in the family received
SNAP in calendar 2010 or 2011.
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2012-13 Verification Items
All Applicants — Child support paid if amount reported on
FAFSA—Statement signed by the applicant,
spouse, or parent who paid the child support certifying:Amount of child support paidName of the person to whom child
support was paidName of the children.
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2012-13 Verification Items
Tax Filers— (Best from IRS Data Retrieval) Adjusted Gross Income (AGI)Taxes paidSpecific untaxed income items from 1040
Untaxed IRA distributionsUntaxed pensions IRA deductionsTax exempt interest
Education credits from 1040
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2012-13 Verification Items
Nontax Filers—
A signed statement certifying that the individual has not filed, will not file, and is not required to file an income tax return for tax year 2011.
Copy of IRS Form W-2 for each source of employment income received for tax year 2011 and listing of sources and amounts of income earned not on W-2s.
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2012-13 Documentation
Comprehensive list in July 13, 2011 Federal Register notice FAFSA IRS Data Retrieval Process IRS Transcript
RequestOn-LinePhone – (800) 908-9946Form 4506T-EZ
IRS Tax Return: Limited conditions
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IRS Data Retrieval
CPS will set flags and comment codes to indicate that the 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 based on results
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Updated IRS Request Flags
00 Student/ Parent was ineligible to use the IRS Data Retrieval Tool and was therefore not presented with the option to use it in FAFSA on the Web
01 Student/ Parent was presented with the option to use the IRS Data Retrieval Tool in FAFSA on the Web and elected to use it, but did not transfer IRS data into the FAFSA
02 IRS data for the student/ parent was transferred from the IRS and was not changed by the user prior to submission of an application or correction
03 IRS data for the student/ parent was transferred from the IRS and changed by the user prior to submission of an application or correction
04 IRS data for the student/ parent was transferred from the IRS and then changed by the user on a subsequent transaction
05 Student/ parent was presented with the option to use the IRS Data Retrieval Tool in FAFSA on the Web, but did not elect to use it
06 IRS data for the student/ parent was transferred from the IRS, but a subsequent change made the student/ parent ineligible to use the IRS Data Retrieval Tool
blank IRS Data Retrieval Tool not available in the application method utilized by the student/ parent(i.e., paper FAFSA, EDE, or FAA Access)
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IRS Data and Verification
An institution may consider as acceptable documentation IRS retrieved information if the Secretary has identified those items as having come from the IRS and not been changed – IRS Request Flag = 02.
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IRS Data Retrieval Tool
2012-2013 FAFSA on the Web will include logic to make the determination for the applicant.
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IRS Data Retrieval Tool
Reminders Around March 15th, students and/or parents
will receive e-mail reminders to update the student’s FAFSA with filed tax information
Messaging encourages the use of the IRS Data Retrieval Tool if the option is available in FAFSA on the Web
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• IFAP.ED.GOV
• HIGHER EDUCATION
Program Integrity Information - Questions and Answers
In order to ensure questions coming into the Department of Education about the Program Integrity Regulations are consolidated and easily accessible to interested parties, we have created this Web site containing questions and answers. We will update this list on a regular basis, therefore be sure to check back for any new information. You will also find links to various resources with additional guidance pertaining to the Program Integrity Issues.
• State Authorization
• Retaking Coursework
• Credit Hour
• Ability-to-Benefit
• Incentive Compensation
• Misrepresentation
• Return of Title IV Funds
• Satisfactory Academic Progress
• Gainful Employment
• Verification
• Program Integrity Home | Negotiated Rulemaking 2009-10 | OPE Policy Page
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Verification END