© 2015 NASFAA
NASFAA Federal Update
Megan McClean Coval
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Agenda
•
•
•
•
•
Washington Political Climate
Federal Budget and Funding Update
Action on Reauthorization
NASFAA Influence
Other Policy Updates:
– Status of Perkins
– Update on Recent Negotiated Rulemaking
– Administration Announces Move to PPY
– Student Aid Bill of Rights
• NASFAA Research Update
• Get Involved!
© 2015 NASFAA
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Washington Political Climate
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Washington Political Climate
• Gridlock with minor issues disrupting entire
process
• Leadership Turmoil in the House
• Partisanship
• Deficit Reduction
• Budget Politics Dictating Policy
• 2016 Election!
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Congressional Approval Numbers
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A Republican Congress & Higher Ed
• New faces on education committees
• Sen. Alexander’s HELP Committee
– Focus on simplifying FAFSA and student aid
– Eye on innovative higher ed models
• Tough battles over funding
– New investments in student aid unlikely
– Simplification should not equate to cuts
• Action towards burdensome regulations
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Federal Budget & Funding Update
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Budget and Appropriations 101: What
Should Happen
Proposes
Budget
WhatPresident
should
happen:
Congress Passes Budget Resolutions
Appropriations Subcommittees Draft
Spending Bills
Full Appropriations Committee Approves
Draft Bills
Appropriations Bills Pass House and Senate
President Signs Appropriations Bills Into Law
by October 1
• But…Congress rarely
follows this process:
– Politics jam the gears, no
punishment for not following
order
– Instead we more often than
not see mechanisms that help
to patch the inability to pass
separate appropriation bills
➢ Continuing Resolution
(CR)
➢ Omnibus
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Student Aid and the Budget
• Funding for student aid falls into the Labor, Health,
Human Services, and Education Appropriations
Subcommittee (Labor-H)
• This is always a very complex bill because so many
important programs share the same pot of funds
• Most student aid funds are “forward funded” meaning
they fund the following award year
– Ex: FY 2016 funds the 2016–17 award year
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Obama FY16 Budget Request (AY 2016-17)
• Grants
– Maximum Pell Grant of $5,915
– Continue to index Pell to inflation beyond FY17
• Campus-Based Aid
– Level fund FSEOG and FWS (FY 2015 levels)
– Revise allocation formula to direct dollars to schools that
enroll and graduate high number of Pell Grant students
– Expand/Reform the Perkins Loan Program
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Obama FY16 Budget Request
• Loans
– Expand Paye As You Earn eligibility to all borrowers
– Pay for this expansion by making modifications to PSLF
• Access and Affordability Proposals
– America’s College Promise ($60 billion/10 yrs)
– College Opportunity Bonus Program ($7 billion/10 years)
➢
Rewards colleges that enroll and graduate low-income students
and encourage all colleges to improve
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GOP FY16 Budget Resolutions
• Political documents, light on specific numbers
• Freeze maximum Pell Grant for next 10 years
– House seeks to address the shortfall “targeting it to
students who need the most assistance”
• Fair Value Accounting for student loans
– $220+ billion cost increase over 10 years
• Reconciliation instruction to find an additional $1 billion
in savings over next 10 years
– Threat to in-school interest subsidy?
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House Proposes Cuts to Aid Programs
• Eliminates mandatory funding for Pell
– Cuts Pell by $89.3 billion
• Eliminates in-school interest subsidy on loans
– Cuts $34.8 billion by shifting costs to students
• Eliminates public service loan forgiveness
– Cuts $10.5 billion, again shifting costs to students
• Eliminates the PAYE expansion
– Cuts $16.3 billion
• All told, $150 billion would be cut from student aid over
10 years
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Senate Proposes Cuts to Aid Programs
• Eliminates mandatory funding for Pell
– Cuts Pell by $89.3 billion
• Eliminates in-school interest subsidy on loans
– Cuts $34.8 billion by shifting costs to students
• All told, $124 billion would be cut from student aid over
10 years
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The Public Opposes Education Cuts
Would you approve or disapprove of reducing federal funding for education as
a way to reduce the size of the national debt?
Source: Pew Research Center for the People & the Press, October, 2012
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Budget Update: Where did we end up?
President Proposes Budget
Congress Passes Budget Resolutions
Appropriations Subcommittees Draft
Spending Bills
Full Appropriations Committee Approves
Draft Bills
Appropriations Bills Pass House and Senate
President Signs Appropriations Bills Into Law
by October 1
• All 12 spending bills passed out
of committee for first time since
2009
• House passed 6 of 12 bills;
Senate passed 0 of 12
• Democrats blocked bills in the
Senate to force negotiation on
sequestration
• Confederate flag controversy
halted bills in the House
• Because Congress could not
agree on appropriations bills or
spending levels, a Continuing
Resolution (CR) was
necessary.
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Budget Update: Continuing Resolution
• Funds the government through December 11, 2015
at levels identical to FY 2015.
• To comply with budget caps under sequestration,
the CR includes a small across-the-board cut of
0.2108% with virtually no impact to student aid
programs.
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Budget Update: Bipartisan Budget Act
Close to midnight on Oct. 26, congressional leaders and
the President Obama unveiled the Bipartisan Budget Act,
which…
• raises sequestration caps for FY 2016 and 2017;
• suspends the debt ceiling through March 15, 2017, at
which time the debt limit will be set at the amount of
debt outstanding on that day;
• and would give Congress until December 11 to pass an
omnibus appropriation measure that allocates the
spending authority among the various Departments and
programs in the federal government.
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Budget Update: Bipartisan Budget Act
• The BBA also includes 1 relevant non-budget
related policy item:
– The Telephone Consumer Protection Act would
be amended to authorize the use of automated
telephone equipment to call cellular telephones
for the purpose of collecting debts owed to or
guaranteed by the United States government,
which would include loan servicing and debt
collection.
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Budget Update: What’s Next?
• The House and Senate will consider the Bipartisan
Budget Act before the November 3 debt ceiling
deadline.
• If passed, putting budget battles and debt ceiling
debates off until 2017 should improve the
productivity of Congress.
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HEA Reauthorization
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Reauthorization
• Theme: Hurry Up and Wait!
• Technically supposed to occur in 2014, but automatically
extended for one year
• NASFAA's Reauthorization Task Force submitted
recommendations to House and Senate Ed Committees
• Glimmer of hope: strong bipartisan passage of ESEA bill in
the Senate in early summer hopefully paves the way for
productive law-making on HEA
• Movement beyond committee work unlikely
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Reauthorization: Existing Legislation
1. Bipartisan Senate bill from Sen. Alexander (R-TN) and Sen.
Bennet (D-CO)
2. Democratic Senate bill at the end of the 113th Congress
from outgoing chairman Sen. Harkin (D-IA)
3. Three bills from the House education committee that
passed the full House last Congress
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Reauthorization: Emerging Themes
Broad Themes: Simplification; Affordability;
Accountability; Transparency
Specific Proposals:
• Prior Prior Year
• Year-Round Pell
• Simplification (Application & Repayment)
• Improvement of loan counseling
• Authority to limit loans
• One grant/one loan
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Reauthorization: What’s Next?
• House and Senate working behind the scenes to build
out ideas and concepts from initial drafts
– Chairman Alexander released a set of White Papers further
outlining his ideas
• How will the pending exits of key players impact the
process?
– Boehner (Oct.), Duncan (Dec.), and Kline (Jan. ’17)
• May see some movement (new or amended bills) this
fall, but unlikely to see final a reauthorization bill that
clears both chambers of Congress before 2016 election
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Influence on Legislation
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Proposals -- Draft Legislation!
NASFAA Policy
Recommendations/Task Force
Year-Round Pell / “Pell Well”
•
Recommended by original RTF
•
Recommended in Gates RADD Project
Legislative and/or Executive Action
•
Sen. Maize Hirono, Pell Grant Protection Act
•
Sens. Alexander/Bennett, bipartisan Financial Aid
Simplification and Transparency (FAST) Act
•
Sen. Harkin, Higher Education Affordability Act
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Proposals -- Draft Legislation!
NASFAA Policy
Recommendations/Task Force
Authority to limit loan amounts
•
Recommended in original RTF
•
Recommended by Task Force on Student
Indebtedness
•
Recommended in RADD
Legislative and/or Executive Action
•
Sens. Alexander/Bennett, bipartisan Financial Aid
Simplification and Transparency (FAST) Act
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Proposals -- Draft Legislation!
NASFAA Policy
Recommendations/Task Force
Servicing Issues Task Force
Legislative and/or Executive Action
•
•
Develop a central loan portal
•
Remove servicer branding
•
Standard policies and procedures manual
•
Improve counseling (make more efficient, etc)
Student Aid Bill of Rights (Obama Administration)
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Proposals -- Draft Legislation!
NASFAA Policy
Recommendations/Task Force
Legislative and/or Executive Action
Campus-based Allocation Task Force
•
•
Sen. Harkin, Higher Education Affordability Act
Remove base guarantee, fund solely on fair share
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Perkins Loans
• Authorized
through
September
2015
– no
No
Federal
Capital
Contribution
(FCC)
since
FY
2005
cancellation
reimbursements
since
Bipartisan
congressional
efforts
to
save
the2010
Perkins
Loan
Program
failed
on
September
30,FY
so
the
program
is
longer
authorized.
Higher
Education
Extension
Act,
which
extends
Perkins,
passed
the
House
unanimously
Sen.
Alexander
(R-TN)
blocked
its
consideration
inthe
the
Senate
because
of
his
focus
on30,
simplification
and
“One
Grant,
One
Loan”
model
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Perkins Loans
• NASFAA advocated for the program on Capitol Hill, but will
now shift focus to ensuring a smooth and equitable closeout of the program, though some advocacy continues on the
Hill for a one-year extension.
• NASFAA’s RTF offered the following recommendations in
the event the program would expire:
➢
➢
Instruct the Secretary of Education to offset the amount of FCC
to be returned to the federal government by the aggregate
amount of unfunded reimbursement for cancellations
Ensure that institutional contributions made in excess of the
minimum required or made when there was no new FCC are
also offset so that the amount due to the federal government is
not overestimated
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Perkins Loans
• ED release stated that if schools make first disbursements
prior to October 1, 2015, then they are allowed to make
subsequent disbursements for the remainder of award year
2015-16
– Early Feb. ED issued DCL GEN-15-03
– Make loans to certain students through September 30,
2020 to enable students who received loans for award
years that end prior to October 1, 2015 to complete their
studies.
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Perkins Loans
Grandfathering
• Schools may make new Perkins Loan
disbursements if the student:
– Received at least one disbursement on or
before June 30, 2015
– Is enrolled at the same institution as the last
Perkins disbursement
– Is enrolled in the same academic program
– Is awarded Subsidized Direct Loan eligibility
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Perkins Loans
Grandfathering
• Expires Sept. 30, 2020
• Only applies to awards from 2014-15 or earlier
• May increase awards amounts for 2015-16,
provided at least one disbursement made prior
to Oct. 1, 2015
• Additional guidance coming regarding
assignments and revolving funds
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Just In: Final Rules
ED published two new rules on October 27:
• REPAYE
• Cash Management
More details to come! Stay tuned to Today’s News for
updates from NASFAA’s Policy & Federal Relations
Team.
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White House: Move to PPY
• On September 14, 2015, President Obama
announced action to implement PPY on the 2016
FAFSA for AY 17-18.
• Immediately following the President’s
announcement, NASFAA announced its intention to
form a PPY implementation task force to ensure a
smooth transition for financial aid offices nationwide
• Further guidance will continue to flow from the
Department of Education in the coming months.
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NASFAA Research Update
•
•
•
•
Collaboration with the Association for the Study of Higher Education
– Examining how to make scholarly research more relevant to practitioners
– Report Release in late 2015
Staffing and Salary Models Update
– NASFAA distributed our new “Benchmarking Survey" (formerly Staffing
Survey and Salary Survey)
– Report release in Winter 2015 along with updated Staffing and Salary
Models website
The Journal of Student Financial Aid is working on a Special Edition focused on
the reauthorization of the Higher Education Act
– Publication date: November 2015
Study on Consumer Information and Law Student Indebtedness
– NASFAA received a grant from Access Group to conduct a 17-month study
on consumer information for graduate-professional students, with a specific
focus on law students
– Reports will be released throughout 2016
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Policy Task Forces
Past
• Reauthorization Task Force
• Reimagining Aid Design and
Delivery (RADD) Task Force
• Task Force on Student Loan
Indebtedness
• Task Force on Public Service
Loan Forgiveness
• Task Force on Campus-Based
Allocations
• Task Force on Consumer
Information
• Task Force on Loan Servicing
• Task Force on R2T4
• Task Force on Innovative
Learning Models
• Task Force on Benchmarking
Existing
• One Grant/One Loan Task Force
• Task Force on Graduate Specific
Financial Aid Data
• PPY Implementation Task Force
• Dynamic Loan Limit Working
Group
Future
• More to come!
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You Can Advocate, Too!
• Join a task force!
• Write a letter!
• Visit with your member of Congress, either locally, or in DC!
• For more information, visit: www.nasfaa.org/take-action/ or
email policy@nasfaa.org
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© 2014 NASFAA
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