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The Reconciliation Bill of 2006: A Panel Discussion

Government Relations CommitteeFebruary 24, 2006

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Why do we care about the Why do we care about the Reconciliation Bill (Public Law 109-171)Reconciliation Bill (Public Law 109-171)

Portions of the Higher Education Act (HEA) were reauthorized as part of this Bill. While many parts of the HEA are not addressed by the Bill, there are significant changes that need to be recognized and addressed.

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The Bill – An Inside LookThe Bill – An Inside Look

Sec 8016. Funds for an Administrative Expense (Effective 07-01-06):– Currently, the Department of Education’s cost for

administering the Title IV programs are mandatory, entitlement spending. It now changes to discretionary spending which leads to subject to annual appropriations.

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The Bill – An Inside LookThe Bill – An Inside Look

Sec 8017. Cost of Attendance (Effective 07-01-06):– Permits Room and Board Costs for less than half time

students. Must use current statutory requirements limited to “not more than 3 semesters or the equivalent, of which

not more than 2 semesters or the equivalent may be consecutive.”

– Permits a one-time inclusion of the cost for a first professional credential for a student in a program requiring professional licensure or certification.

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The Bill – An Inside LookThe Bill – An Inside Look

Sec 8018. Family contribution (Effective 07-01-07):– Increases dependent student IPA from $2,200 to $3,000.

– Increases current independent student with an IPA of $5,000 to $6,050 and the current independent students with an IPA of $8,000 to $9,700

– Reduces the Asset Conversion Rate from the current 35% to 20% for dependent and independent students and the current 12% to 7% for independent students with dependents other than a spouse.

– Ensures at least a five percent (greater of CPI or 5 percent) annual increase in the IPA.

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The Bill – An Inside LookThe Bill – An Inside Look

Sec 8019. Simplified Need Test and Automatic Zero improvements (Effective 07-01-06):– Modifies the Simplified Needs Test and the Automatic

Zero EFC to expand eligibility for students and/or Parents who receive benefits from a “Means-Tested Federal Benefit Program”.

Such as Supplemental Security Income Program, Food Stamps, School Lunch, TANF, WIC and other identified programs.

– Expands the Automatic Zero EFC income cap from $15,000 to $20,000.

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The Bill – An Inside LookThe Bill – An Inside Look

Sec 8020. Additional Need Analysis Amendments (Effective 07-01-06):– Adds Active Duty Members of the Armed Forces to the

definition of Independent students.

– Exempts small business with 100 or fewer employees that are owned and controlled by the family from the definition of assets.

– 529 Plans are to be considered as assets of the parent not the dependent student.

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The Bill – An Inside LookThe Bill – An Inside Look

Sec 8021. General Provisions (Effective 07-01-06):– Modifies academic year definition to 26 weeks for Clock

Hour Schools remains at 30 weeks for Credit-Based Schools.

– Modifies the 50/50 rule to restrict “course by correspondence” to exclude courses offered by telecommunication.

– Liberalizes the restriction and regulations for distant education programs to qualify for Title IV funds.

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The Bill – An Inside LookThe Bill – An Inside Look

Sec 8022. Student Eligibility (Effective 07-01-06):– Adds a new eligibility requirement that a student that has

received any aid funds fraudulently must repay these funds to reinstate eligibility.

– Permits the U.S. Department of Education to verify income data through the IRS.

– Modifies the provision providing for Title IV ineligibility due to drug offenses to only include offenses that conviction occurred during a period of enrollment for which the student received Title IV student aid.

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The Bill – An Inside LookThe Bill – An Inside Look

Sec 8023. Institutional Refunds (Effective 07-01-06):– Spells out late disbursement requirements.

– Increase the current 30-Day timeframe for the return of funds to a 45-Day timeframe.

– Clarifies the 50% provision for student repayments. This overturns the current Department’s interpretation.

– Increases the minimum cap from $25 to $50 that a student is not required to return.

Massachusetts Educational Financing Authority

Group Discussion:Group Discussion:Comments and BrainstormComments and Brainstorm

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Thank YouThank You

The MASFAA Government Relations Committee