LASFAA Spring Conference
March 8, 2012
Federal Student Aid Update
1
• FSA Update will be posted to LASFAA’s
website.
• www.lasfaa.org
How is the Ride in Financial Aid?
Recent Legislation and
Ramifications of Old Legislation
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 edit for compliance
6
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 edit for compliance
– Allows interest rate reduction to borrowers
who repay electronically
7
Consolidated Appropriations
Act – 2012
See DCL GEN-12-01
2012-2013 Pell Grant Amounts
• 2012-2013 Pell maximum award - $5,550
• 2012-2013 Pell minimum award - $550
• Maximum Pell eligible EFC is 4995
• Was 5273 in 11-12
• 2012-2013 payment schedules posted IFAP
on January 12, 2012 (P-12-01)
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)
• Exceptions for
• Home schooled students
• Students who were enrolled in a
Title IV eligible program of study
prior to July 1, 2012
Ability-to-Benefit (ATB)
• Students who are or were, enrolled in a Title
IV eligible program anytime prior to July 1,
2012, 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
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 LEU reaches 600%, student no longer
eligible
• If LEU more than 500% but less than 600%,
partial eligibility for next award year
Pell Grant Duration of Eligibility
Examples –
• 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
Pell Grant Duration of Eligibility
• Electronic Announcement posted on
February 17
• Beginning mid April, COD will begin
sending –
• Weekly reports to schools of their
2012-2013 applicants who have LEUs
of more than 450%
• Emails to students who have LEUs of
more than 450%
Pell Grant Duration of Eligibility
• Electronic Announcement posted on
February 17
• Beginning in July –
• NSLDS will display student’s LEU
• CPS will use comment codes to flag
students whose LEU is close to or
exceeds 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
CCRAA of 2007 Interest Rate Reductions
First disbursement of a loan:
Made on or after
And made before
Interest rate on
the unpaid
balance
July 1, 2008
July 1, 2009
6.0 percent
July 1, 2009
July 1, 2010
5.6 percent
July 1, 2010
July 1, 2011
4.5 percent
July 1, 2011
July 1, 2012
3.4 percent
CCRAA of 2007 Interest Rate Reductions
• Will sunset on June 30, 2012
• All Stafford Loans, grad and undergrad,
sub and unsub, first disbursed
on July 1, 2012 or later
– Will have interest rate of 6.8%
– 6.8% was the pre-CCRAA rate
• Requires change in law to prevent
automatic increase
President’s FY 13 Budget
FY 13 Budget
 $5,635 maximum Pell Grant award for
2013-2014
 Maintain the subsidized loan interest rate
for undergraduate students at 3.4 percent
for undergraduates until July 1, 2013
 Limit the duration of the Stafford Loan inschool interest subsidy to 150 percent of
the normal time required to complete the
borrowers’ educational program
FY 13 Budget
 Expand and improve the Perkins Loan
program to provide $8.5 billion in loans
annually
 Provide $150 million in new funds for the
Work-Study Program
 Reform and expand Federal allocations in
the campus-based programs
FFEL/Direct Loan
Cohort Default Rates
What is the CDR Calculation?
A cohort default rate is the percentage of
the number of the school’s FFEL and
Direct Loan borrowers who enter
repayment in one Federal Fiscal Year
(October 1 through September 30) who
default in that federal fiscal year or by the
end of the next federal fiscal year.
HEOA Changes
• Increases the 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
2-Year Versus 3-Year Calculation
The Numerator is the
number of borrowers from
the denominator who
default within a cohort
period
FY-09
125
5,000
FY-10
230
FY-09
125
FY-10
230
The Denominator is the
number of borrowers who
enter repayment within a
cohort period
355
5000
7.1%
FY-11
250
605
5000
.071 or
.121 or 12.1%
5,000
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Transition Period
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CDR Sanctions
School’s 3 most recent
Loss of Pell and DL for
official CDRs are 25.0% or the current year and two
higher for the 2 year
subsequent fiscal years
calculation OR 30.0% or
higher for the 3 year
calculation
A school‘s current official
CDR is greater than
40.0%, for either 2 year
and 3 year
calculation.
Loss of DL for the current
year and two subsequent
fiscal years
Sanctions based 3 year CDRs will not be
implemented until 2014
If 2009 3 Year CDR is ≥ 30.0%
• Identify the factors causing the default
rate to exceed the threshold;
• Establish measureable objectives and
the steps the school will take to improve
its cohort default rate; and
• Specify the actions the school will take
to improve student loan repayment,
including counseling students on
repayment options.
Program
Integrity
Regulations
Program Integrity - Resources
•
•
•
•
Notice of Proposed Rulemaking—June 18, 2010
Final regulations—October 29, 2010
Program Integrity Questions and Answers
http://www2.ed.gov/policy/highered/reg/hearulema
king/2009/integrity-qa.html
High School Diploma
High School Diploma
Schools must develop and follow procedures
to evaluate the validity of a student's high
school diploma if the school 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.
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High School Diploma
• FAFSA will ask student to indicate high school.
– Being on the list does not mean “approved”
– Not being on the list does not mean “unapproved” or
“questionable”
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Verification
Verification Resources
• Federal Register Notice of Information To Be
Verified for the 2012–2013 Award Year
http://www.ifap.ed.gov/fregisters/FR071311FAFSA
Information.html
• GEN-11-13 and GEN-11-03
http://www.ifap.ed.gov/dpcletters/GEN1113.html
http://www.ifap.ed.gov/dpcletters/GEN1103.html
39
Verification Resources
• Q&A on Program Integrity web site:
– http://www2.ed.gov/policy/highered/reg/hearul
emaking/2009/verification.html
• Sample 2012-13 Verification Worksheets
– http://www.ifap.ed.gov/eannouncements/0203
12SampleVerificationWorksheets1213.html
40
Verification Resources
• FAFSA-IRS Tax Return Transcript Matrix
– http://www.ifap.ed.gov/eannouncements/0224
12Verification1213IRSTaxReturnMatrix.html
• 2012-13 Application and Verification Guide
– http://ifap.ed.gov/fsahandbook/1213FSAHand
bookAVG.html
41
Verification - Definitions
• Subsidized student financial assistance
programs
– Eligibility uses EFC
– Verification applies
– Pell, FSEOG, FWS, Perkins, Direct Subsidized Loan
• Unsubsidized student financial assistance
programs
–
–
–
–
Eligibility does not use EFC
Verification does not apply
Direct Unsubsidized Loan & Direct PLUS Loan
TEACH Grant
42
Verification Selection
• CPS applies risk model to FAFSA data
• Goal is to target verification based upon
the most error prone data items specific
to an applicant
• Non-selected applicants are again
subject to risk model when submitting
corrections
43
Verification Selection
• Institutions must verify all applicants
selected by CPS
• Removes institution’s option to verify
only 30% of applicant pool
44
Changes To FAFSA Information
• For subsidized programs, submit all
verification changes to CPS if change is:
– To any nondollar item or
– A single dollar item of $25 or more
• $400 tolerance is eliminated
• If required to submit one change, must
submit all changes
45
Verification Items
• Regulation eliminates five required
verification items
• Annual Federal Register notice lists
verification items and acceptable
documentation
– 2012-13 notice published 7/13/11
46
Verification Items
• Goal to specify required verification items for
individual applicant on SAR/ISIR
• Institution may select additional applicants or
verify additional items for an applicant
47
2012-13 Verification Items
• All applicants—
– Household size
– Number in college
– SNAP benefits (formerly food stamps)—if
receipt reported on FAFSA
– Child support paid—if amount reported on
FAFSA
48
2012-13 Verification Items
• Tax filers—
– Adjusted gross income
– U.S. income tax paid
– Education credits
– Specific untaxed income items
•
•
•
•
Untaxed IRA distributions
Untaxed Pensions
IRA deductions
Tax Exempt Interest
– Making Work Pay will not be on 2011 returns
49
49
2012-13 Verification Items
• Non-tax filers
– Income earned from work
50
Acceptable Documentation
• For items on 2011 income tax return—
• Amounts retrieved & unchanged from
IRS via FOTW (either on initial or
correction application) with IRS Request
Flag value of 02 OR
51
51
Acceptable Documentation
• A tax return transcript obtained from the
IRS—see DCL GEN-11-13
• For all other verification items—
• Verification worksheet—either ED’s
sample or developed by institution
52
52
IRS Data Retrieval
• FAFSA on the Web IRS Data Retrieval
Process will only transfer information
from an original tax return and not from
an amended tax return
IRS Transcripts
• IRS Tax Return Transcript only includes
information from the original tax return.
• IRS Tax Account Transcript, does include tax
return items that were changed when an
amended return was filed, it does not include
all of the data that did not change. Therefore,
both an IRS Tax Return Transcript and an
IRS Tax Account Transcript must be obtained
from the IRS when an amended return was
filed.
IRS Record of Account
• Record of Account which includes the required
information from both the IRS Tax Return
Transcript and the IRS Tax Account Transcript.
• Record of Account can only be requested using a
paper IRS Form 4506-T and, as a paper request, it
could take up to 30 days for the tax filer to receive
the Record of Account, whereas the IRS Tax
Return Transcript and IRS Tax Account Transcript
can be requested electronically from the IRS or by
phone, which for electronic filers will yield quicker
results.
Acceptable Documentation
• IRS Data Retrieval Process
• IRS Tax Return Transcript
– By paper (Form 4506T-EZ or IRS Form 4506-T) 10
business days for processing
– Online or by phone—5 to10 business days for processing
• IRS Tax Account Transcript (used with amended
returns)
– By paper (Form 4506-T)—processed within 30 calendar
days
– Online or by phone—5 to 10 business days for processing
56
Acceptable Documentation
• Record of Account
– By paper only (Form 4506-T)—processed within
30 calendar days
57
Documentation: Household Size
• Household size
• Signed statement including—
• Name of each household member,
• Age of each household member, AND
• The relationship to the applicant
58
58
Exceptions: Household Size
• For dependent student when parental
marital status is– Single, separated, divorced, or widowed and
family size on the FAFSA = 2
– Married and family size on the FAFSA = 3
• For independent student who is– Single, separated, divorced, or widowed and
family size on the FAFSA = 1
– Married and the family size on the FAFSA = 2
59
Documentation: Number in College
• Number in college
• Signed statement
• Name and age of each household member who
will attend eligible postsecondary educational
institution at least half-time in 2012–2013
• Name of the eligible institution(s) that each
household member is or will be attending
during 2012–2013
• Not required if applicant is only member
60
in college
60
Documentation: SNAP
• Supplemental Nutrition Assistance Program
(SNAP) benefits (formerly food stamps) if
receipt is reported on the FAFSA
– Certification on verification worksheet
– Institution may request documentation from the
agency that issues the SNAP benefit
– FOTW users who get SNAP may never see the
question
61
32
Documentation: Child Support
• Child support paid if reported on the
FAFSA
• Certification on verification worksheet
(or separate statement) indicating—
– Amount of child support paid
– Name of the person to whom it was paid,
and
– Name of the children for whom it was paid
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33
IRS Extension Filers
• Verification is complete if you have -– Documentation of IRS extension and
– 2011 W-2 Forms or statement from selfemployed individual
• MAY require an individual granted a tax
filing extension to provide a copy of their
completed and signed tax return when filed
63
63
IRS Extension Filers
• MUST verify AGI and taxes paid, if you
receive a copy of the return
• May return all funds disbursed, if you do
not receive copy
64
64
Verification & PJ
• Requires verification of all selected
applicants before exercising
professional judgment
• Does not mean verification is required
before exercising PJ for non-selected
applicants
65
General Updating
• FAFSA-reported info is generally a snapshot
• Unless due to student’s marital status
change, must update for—
– Dependency status changes (all applicants,
anytime) AND
– Household size and number in college (selected
applicants, at the time of verification)
66
Marital Status Updating
• Marital status updates permitted only by
FAA to address inequity or better reflect
ability to pay—
– When dependency status changes
– AND/OR
– When selected applicant needs to update
household size and number in college
• If FAA changes marital status, other
updates may be needed
67
Interim Disbursements
• May make interim disbursements without
receipt of corrected ISIR if completed
verification makes no change to aid
eligibility
• All required corrections must be submitted
to CPS AND school must receive revised
ISIR transaction OR school will be liable for
payment student receives
68
Verification After Enrollment Ends
• Student no longer limited to lesser
Pell Grant award if verification
completed after enrollment ends
• Student will receive Pell Grant
payment based upon correct EFC
69
Process is a Work in Progress
• Keep watching IFAP for Q&As, EAs, and DCLs
• Watch for an updated Matrix
• Watch for info about multiple requests for the
same transcript
• Watch for the Federal Register where 13-14
verification elements will be identified
Gainful Employment
Gainful Employment Info
• Gainful Employment Page on IFAP at:
http://ifap.ed.gov/GainfulEmploymentInfo/
or from IFAP Homepage
– Regulations and Federal Register Notices
– Dear Colleague Letters and Electronic
Announcements
– Frequently Asked Questions
– Training, including webinars
– Resources
72
GE Reporting
• Institutions must annually report
information about students enrolled in GE
Programs
• General information on reporting was
provided in the Dear Colleague Letter
GEN-11-10
• NSLDS GE Reporting Guide at http://ifap.ed.gov/GainfulEmploymentInfo/
index.html
73
GE Reporting
• Reporting is by –
– Award Year
– Student
– GE Program
• Institution (Six-digit OPEID)
• CIP Code (See User Guide)
• Credential Level (See User Guide)
74
GE Metrics
 Metrics final rule published on June 13, 2011
 Defines “gainful employment” to be when a
substantial number of the GE Program’s
students –
 Are repaying their Title IV loans –
 Repayment Rate
Have a reasonable debt burden –
 Debt to Earnings Ratios.
75
GE Metrics
 ED calculates Repayment Rate as –
 A percentage of the Title IV loan amounts
that a GE Program’s former students are
repaying
 ED calculates Debt to Earnings Ratios as –
 The median educational loan annual
repayment amount as a proportion of the
borrowers’ average annual income
76
Title IV Eligibility
• A program must pass at least one of the
following three rates to be a Gainful
Employment Program eligible for Title IV
participation:
– Repayment rate of at least 35%.
– Debt-to-Earnings ratio of less than 12% of total
annual earnings, or
– Debt-to-Earnings ratio of less than 30% of total
discretionary income.
77
Title IV Eligibility
• If a failing program for three of four
years, program loses eligibility for
Federal student aid.
78
GE Contact Information
General Information: IFAP Website Gainful
Employment Information Page
Policy Questions: ge-questions@ed.gov
Reporting Questions: nslds@ed.gov
79
Negotiated Rulemaking
• Federal Register Notice—
– October 28, 2011
• Two teams—
– Student loan issues
– Teacher preparation issues
• http://www2.ed.gov/policy/highered/reg/
hearulemaking/2011/index.html
Negotiated Rulemaking
• Federal Register Notice—
– October 28, 2011
• Two teams—
– Student loan issues
– Teacher preparation issues
• http://www2.ed.gov/policy/highered/reg/
hearulemaking/2011/index.html
Other Resources
General Title IV Treatment of An Award for 2011-2012 *
START
Is award
received
because of
postsecondar
y enrollment
or to pay for
education
costs?
No
[STOP] Not EFA (If in
income, it remains in
income)
*Federal veterans education benefits,
as defined in section 480(c) of the
HEA, and the Iraq and Afghanistan
Service Grant are not EFA nor used
in calculating EFC
Yes
Is award
considered
employment
according to
Federal or
State rules?
No
[STOP] Treat
as EFA (If in
income, list
amount in
FAFSA
question 43)
Yes
Is
employment
based on
need?
No
[STOP] Not
EFA (If in
income, it
remains in
income)
Yes
[STOP] Treat
as EFA (If in
income, list
amount in
FAFSA
question 43)
FSA Training
• No in-person training scheduled this
year except for FT4
• Variety of CBTs are available
• Variety of webinars are planned
– Business Officer Series
– Default Aversion webinars
– Some webinars are only recorded
• GE Guide is planned for release soon
• TOPICS Survey
FSA Conference
• 2011 presentations are moving from one
server to another and will be available
again soon
• 2012 FSA Conference will occur
– Location TBD
Supervisor of Training
Officers Requests Feedback
from FAAs
• Jo Ann Borel
• Supervisor of Training Officers
• United States Department of EducationFederal Student Aid
• Phone: 202-377-3930
• joann.borel@ed.gov
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Contact Information
Kevin Campbell
Training Officer
United States Department of Education
kevin.campbell@ed.gov
214.661.9488
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