Michigan Association of Student Financial Services

Administrators

Federal UpdateMay 23, 2006

Gail McLarnon United States Department of Education

MASFSA Federal Update

FY 2006 Final Appropriations Higher Education Reconciliation Act

of 2005 President’s FY 2007 Budget Request HEA Reauthorization Dear Colleague Letters & Federal

Register Notices

FY 2006 Final Appropriations Public Law 109-148 -- Department of

Defense Appropriations Act, 2006 Emergency Appropriations for Hurricane

Education Recovery 1% Government-wide Reduction of FY

2006 Discretionary Appropriations Public Law 109-149 -- Departments of

Labor, HHS, and Education, and Related Agencies Appropriations Act, 2006

Final FY 2006 Program Budgets(dollars in thousands)

Award Year President's Final2005-06 Request Appropriation

Pell Grant $ 12,364,997 $ 17,952,821 $ 17,345,230 (Max Award) $4,050 $4,150 $4,050

(Shortfall) $ 4,300,821 $ 4,300,821 $ 4,300,000

FSEOG $ 778,720 $ 778,720 $ 770,933

FWS $ 990,257 $ 990,257 $ 980,354

Perkins $ - $ - $ - (Cancellations) $ 66,132 $ - $ 65,471

LEAP $ 65,643 $ - $ 64,987 Math/Science $ 50,000

Program

* Includes shortfall

* *

HERA – Higher Education Reconciliation Act of 2005 Deficit Reduction Act of 2005 – P. L 109-171

Conference Report Passed House on December 19, 2005 – 212-206

Conference Report Passed Senate on December22, 2005 in slightly different form – 51 to 50

House Passed Senate’s Version on February 1

President signed into law February 8, 2006

Budget Reconciliation—Key Higher Education Provisions Authorizes “Academic

Competitiveness Grants” $750 to first-year undergrads at 2-

and 4-year schools who complete rigorous high school curriculum

$1,300 to second-year undergrads at 2- and 4-year schools who complete rigorous high school curriculum and earn at least a 3.0 GPA as 1st year undergrad

Budget Reconciliation – Key Higher Education Provisions Authorizes National “Science and

Mathematics Access to Retain Talent (SMART)” Grant Program $4,000 to 3rd and 4th year undergrads at 4-year

schools with at least a 3.0 GPA who major in physical, life, or computer sciences, mathematics, technology or engineering or a foreign language critical to national security

Both programs are funded and will be operational for the 2006-2007 award year

Budget Reconciliation – Key Higher Education Provisions Effective July 1, 2007: 1st and 2nd

year Stafford loan limits increase to $3,500 and $4,500, respectively

Effective July 1, 2007, $12,000 loan limit for grad/professional students

Authorizes PLUS Loans for graduate and professional students

Budget Reconciliation – Key Higher Education Provisions Provides for a 3-year military deferment

for all title IV borrowers applicable to loans made on or after July 1, 2001

Reduces from 12 to “9 payments made within 20 days of due date” to successfully rehabilitate and sets GA collection costs at 18.5%

Reinstates expired multiple disbursement and 30-day delay waivers

Budget Reconciliation – Key Higher Education Provisions Makes active duty military

independent Clarifies that loss of eligibility only

for drug-related offenses while enrolled

Modifies need analysis formula and expected family contribution

Modifies distance education rules

Budget Reconciliation – Key Higher Education Provisions Limits direct disbursement of FFEL

loans for students studying abroad Requires that Federal Direct Loan

repayment plans, other than income contingent, be consistent with FFELP

Provides for false cert discharge for victims of identify theft

Budget Reconciliation – Key Higher Education Provisions Makes permanent Taxpayer-Teacher

Protection Act provisions relating to increased loan forgiveness amounts and provides loan forgiveness for “competent” private school teachers

Makes permanent Taxpayer-Teacher Protection Act provisions eliminating 9.5% floor loans and eliminates “recycling” of most tax-exempt bonds

Budget Reconciliation – Key Higher Education Provisions Consolidation Loans –

Retains single holder rule Eliminates spousal consolidation Eliminates in-school consolidation Limits consolidation from FFEL to Federal

Direct Loan Program Requires same terms for FFEL and Federal

Direct consolidation loans Maintains current fixed interest rate for

consolidation loans

Budget Reconciliation – Key Higher Education Provisions Retains 6.8% fixed Stafford interest rate PLUS interest rate set to fixed 8.5% rate Phases down FFELP Stafford origination

fees to 0% by 7/1/2010 Requires deposit of 1% default fee into

GA’s Federal Fund Phases down Federal Direct Loan

origination fees to 1% by 7/1/2010

President’s FY 2007 Budget Request Title IV Program Budgets

AppropriationsFY 2005 FY 2006 FY 2007*(AY 05-06) (AY 06-07) (AY 07-08)

Pell Grant $12,364,997,280 $13,045,230,000 $12,738,770,000 (Max Award) $4,050 $4,050 $4,050

FSEOG $ 778,720,000 $ 770,932,800 $ 770,932,800

FWS $ 990,257,056 $ 980,354,485 $ 980,354,485

Perkins $ 66,131,680 $ 65,470,363 $ -

LEAP $ 65,643,000 $ 64,987,000 $ -

Acad Comp& SMART $ - $ 790,000,000 $ 850,000,000

Program

* President's FY 2007 Budget Submission

President’s FY 2007 Budget Request Title IV Program Budgets

Aid AvailableFY 2006 FY 2007*

(AY 06-07) (AY 07-08)Pell Grant $ 12,745,900,000 $ 12,986,000,000 (Max Award) $4,050 $4,050

FSEOG $ 975,900,000 $ 975,900,000 FWS $ 1,172,000,000 $ 1,172,000,000 Perkins $ 1,135,000,000 $ 133,000,000 LEAP $ 165,000,000 $ - AC/SMART $ 790,000,000 $ 850,000,000 Loans $ 60,577,000,000 $ 66,082,000,000 TOTAL $ 77,560,800,000 $ 82,198,900,000

Program

* President's FY 2007 Budget Submission

President’s FY 2007 Budget Request

Federal Pell Grant Program Proposals Maximum award for 2007-2008

remains at $4050 Year-round Pell Grants Eligibility limited to equivalent of 16

semesters Tuition sensitivity award rule

President’s FY 2007 Budget Request

Campus-Based Programs Proposal No proposed changes for FSEOG and

FWS Programs Perkins Loan Program

No funding for Federal Capital Contribution or Loan Cancellation

Recall Federal portion of loan repayments Work with Congress on the future of the

program

President’s FY 2007 Budget Proposal

No changes to FFEL and Direct Loans

No funding requested for LEAP GEAR UP Upward Bound Talent Search Byrd Honors Scholarship

Higher Education Act Extension Legislation

Higher Education Extension Act of 2005 – P.L. 109-150 Extends the HEA through March 31,

2006 Higher Education Extension Act of

2006 – P. L. 109-212 Extends the HEA through June 30, 2006

HEA Reauthorization? House Education Committee now

chaired by Rep. McKeon (R-CA) Reauthorization provisions not

contained in reconciliation will comprise reauthorizing legislation

House passed H.R. 609 on March 30 Senate has yet to act

Perkins Loan Program Reauthorization Proposals

H.R. 609 – passed the House on March 30 by a vote of 221-199

Federal Perkins Loan Program Reauthorizes the Perkins Loan Program Raises Undergrad/Grad loan limits

$5,500/$27,500 -- Undergraduate $8,000/$60,000 -- Graduate

Eliminates “written” forbearance request

Perkins Loan Program Reauthorization Proposals

H.R. 609 – Federal Perkins Loan Program Decreases consecutive monthly payments

required to rehabilitate from 12 to 9 Allows for 100% cancellation for Military

service in areas of hostility Requires Secretary to authorize

compromise repayment on defaulted loans

Perkins Loan Program Reauthorization Proposals

S. 1614 – Federal Perkins Loan Program Perkins Loan Program is reauthorized Eliminates “written” forbearance

request Removes “defense of infancy” as

borrower defense against repayment

Perkins Loan Program Reauthorization Proposals

S. 1614 – Perkins Loan Program Proposals: New Cancellation Provisions

Expands Head Start Cancellation to Include Full-time Staff in Pre-K or Child Care Programs

Faculty Members of Tribal Colleges Librarians in Low-Income Schools/Areas Speech Therapists in Low-Income

Schools

Hurricane Legislation and Guidance

Pell Grant Hurricane & Disaster Relief Act (Pub. L. 109-66)

Student Grant Hurricane Disaster Relief Act (Pub. L. 109-67)

Waives repayment of Pell & TIV grants for Hurricane-related withdrawals

Dear Colleague Letter GEN-05-07 (Pub. 11-09-05)—Waiver guidance

Recently Published Dear Colleague Letters Dear Colleague Letter GEN-06-09

(Published May 11, 2006) – Eligibility for Title IV Program Assistance for Victims of Human Trafficking

HHS must certify an individual as a victim of human trafficking & issue certification/eligibility letter

FAA must confirm HHS certification

Recently Published Dear Colleague Letters Dear Colleague Letter GEN-06-04

(Published April 5, 2006) Process and operational information on

the Academic Competitiveness Grant ED notifies applicant and applicant’s school

of potential eligibility Website listing “rigorous” curriculum

provided to applicant School obtains appropriate documentation

and submits payment records to ED

Recently Published Dear Colleague Letters Dear Colleague GEN-06-04 (cont.) Process and operational information

on National SMART Grant ED will publish list of eligible majors School has information needed to

identify Pell-eligible applicants who are majoring in designated subject area

School establishes eligibility/submits payment information

Recently Published Dear Colleague Letters

Dear Colleague Letter GEN-06-06 (Published May 2, 2006) – Provides a list of academic majors eligible for the National SMART Grants for the 06-07 award year

Dear Colleague Letter GEN-06-08 (Published May 3, 2006) – Additional implementation guidance for ACG and National SMART Grant Programs

Recently Published Dear Colleague Letters

Dear Colleague Letter GEN-06-05 (Published April 27, 2006) – Changes made by the HERA to: Student and Institutional Eligibility Student Assistance General Provisions

Recently Published Dear Colleague Letters Dear Colleague Letter GEN-06-02 &

FP-06-01 (Published March 10, 2006)— Enactment of the Higher Education Reconciliation Act of 2005 ("the HERA"), Pub. L. 109-171 – Revised March 14, 2006

Topics that affect institutions/borrowers and lenders/guaranty agencies

Recently Published Dear Colleague Letters Dear Colleague Letter FP-06-05

(Published April 25, 2006) – Promissory Note Addenda & Revised Plain Language Disclosures for FFEL Program Loans

Guidance on awarding Federal PLUS Loans to Graduate and Professional Students

Recently Published Dear Colleague Letters Dear Colleague Letter FP-06-03 (Pub.

March 17, 2006) – Federal Family Education Loan Consolidation Loans

Reiterates and confirms the Department's position that, beginning April 1, 2006, it will enforce the single holder rule in the making of FFEL Consolidation Loans.

Recently Published Dear Colleague Letters Dear Colleague Letter GEN-05-15 Reaffirms

& clarifies Perkins borrowers must provide services exclusively and directly to “high risk children from low-income communities” to receive cancellation

05-06 Handbook corrects definition of high-risk children: “Individuals under the age of 21 who are low-income OR at risk of abuse or neglect, have been abused…..”

Recently Published Federal Register Notices

January 18, 2006 – Federal Register Notice inviting comments on renewal of FISAP Dear Colleague Letter CB-06-06 (Pub.

March 30, 2006)—DRAFT FISAP January 25, 2006 – Federal Register

Notice inviting comments on renewal of FFEL/DL/Perkins Loan Total and Permanent Disability Discharge Form

Recently Published Federal Register Notices

February 14, 2006 – Federal Register Notice inviting comment on renewal of the Federal Perkins Loan Program Master Promissory Note

February 21, 2006 – Federal Register Notice inviting comment on the renewal of the Federal Perkins Loan Program Assignment Package

Perkins Loan Program Management Issues Federal Perkins Loan Assignment

Package (forms and instructions) expires June 30, 2006

OMB Clearance process will propose: Retention of MPN disbursements records for

provision to ED, if needed, for enforcement after assignment

Elimination of requirement to renew a judgment before assignment

Submission of e-signature authentication process for electronically-signed prom notes

Perkins Loan Program Department of ED Contacts Assignment

John.R.Adams@ed.gov Campus-based Operations

FISAP – Sherlene.McIntosh@ed.gov Liquidation -- Rhonda.Herbert@ed.gov Low Income Directory – Pamela.Wills@ed.gov

Policy: Gail.McLarnon@ed.gov Brian.Smith@ed.gov

Policy/Operations: Donald.Watson@ed.gov

Perkins Loan Program Department of ED Contacts NSLDS: Pam.Eliadis@ed.gov Sue.Barnette@ed.gov

Permanent & total disability assignments: Jennifer.Ryder@ed.gov

Policy/Operations: Donald.Watson@ed.gov