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Department of Education Update
COHEAO 2013 Annual Conference
Brian SmithU. S. Department of Education
Jan. 28, 2013
TOPICS
FY 2013 Budget Recent Legislation Regulatory Activity ED Initiatives Perkins Loan Issues Electronic Announcements/DCLs
FY 2013 Budget
FY 2013 Budget Request
• Helping Students Afford College– Increase maximum Pell Grant award to
$5,635– Double the number of Work Study Jobs– Freeze student loan interest rates on
subsidized Stafford Loans at 3.4 percent– Eliminate subsidy for borrowers who
remain in school beyond 150 percent of their program length
– Establish Presidential Teaching Fellows Program
FY 2013 Budget Request
• State Reform– $1 billion for first year of Race to the Top:
College Affordability and Completion• Competitive grants to States with strong
records of and commitments to increasing college affordability and quality
– $150 million in funding for State access and completion initiatives• Formula aid to States to bolster their access,
persistence and completion activities
FY 2013 Budget Request• Institutional Innovation and Reform
– $55 million for a “First in the World” competition• Fund innovative programs that improve college
access or completion rates
– Reform Campus-Based Aid to encourage value and competition• Target funds to schools with demonstrated
commitment to providing high-quality education at a reasonable price
• Modernize Perkins Loan Program
FY 2013 Budget Request
• Empower Students and Families– Create a “College Scorecard” for all
degree-granting institutions• Present clear information for students and
families to help them choose a college that is priced affordably and that is best suited to their needs and goals
– Make the American Opportunity Tax Credit permanent
FY 2013 Budget Request
• Continued support for college access and institutional support programs– $840 million for Federal TRIO Programs– $302 million for GEAR UP– $431 million in discretionary funding for
Title III and Title V aid– $81 million for College Pathways and
Accelerated Learning
Recent Legislation
Interest Rate Extension• P.L. 112-141 signed by President on
7/6/2012 includes 1-year extension of 3.4 percent interest rate on Direct Subsidized Loans to undergraduates http://ifap.ed.gov/eannouncements/071012InterestRateFinal.html
• Limits eligibility for Direct Subsidized Loans for new borrowers on or after 7/1/2013 to no more than 150 percent of published length of borrower’s program
Regulatory Activity
Negotiated Rulemaking
• Negotiated Rulemaking Website:– http://www2.ed.gov/policy/highered/reg/hea
rulemaking/2011/loans.html
• Federal Register Notice published May 5, 2011 announcing intent to establish Negotiated Rulemaking committees and hold public hearings– Tacoma, Washington– Chicago, Illinois– Charleston, South Carolina
Negotiated Rulemaking• Federal Register Notices published
October 26, 2011 and October 28, 2011 announcing decision to establish Negotiated Rulemaking teams to address:– Teacher preparation program issues in
HEA, Title II and TEACH Grant Program – Student loan program issues
• Solicited nominations for non-Federal negotiators
Negotiated Rulemaking• Dates of Student Loans Team Meetings
– January 9-13, 2012– February 13-17, 2012– March 26-30, 2012
• Loans Team Reached Consensus• ED will publish two NPRMs
– NPRM #1 includes TPD and IBR/ICR regs– NPRM #2 will include regs for the
remaining student loan program issues
Negotiated Rulemaking
• NPRM #1 published on July 17, 2012 http://ifap.ed.gov/fregisters/attachments/FR071712LoanProposeRulemaking.pdf
• Docket ID number: ED-2012-OPE-0010
• Closing date for public comments was August 16, 2012
• We received 2,892 public comment submissions
• Final was published on Nov. 1, 2012
Negotiated Rulemaking
• Pay As You Earn implemented under ICR regulations in Direct Loan Program only
• IBR model followed:– Borrower must show partial financial
hardship (PFH) and annual reevaluation of PFH status required
– Interest capitalized as in IBR – borrower no longer PFH, no income for annual evaluation, or borrower leaves ICR
Negotiated Rulemaking
• IBR model followed (cont.):– ED pays accrued interest for 3 consecutive
years if borrower payment is less than accrued interest
• Unlike IBR, 10% overall cap on amount of interest capitalization
• New borrower in 2008 is FY 2008, beginning 10/1/2007 and is defined as in DL and FFEL TLF Program—no outstanding balance as of 10/1/2007 or upon receipt of new loan after that date
Negotiated Rulemaking
• New loan in 2012 is any Direct Loan disbursement made on/after 10/1/2011 (FY 2012) to a borrower who meets new borrower definition
• Borrower annual payments capped at 10% of discretionary income and loan forgiveness after 20 years of repayment
Negotiated RulemakingTotal and Permanent Disability Regulatory Changes
– Revise Perkins & FFEL regulations to provide for direct application to ED for TPD discharge• Simplifies the process• Establishes a single point of contact• Reduces application processing time• Provides more consistency in determinations• Provides uniformity in communications• Ensures all of a borrower’s Title IV loans are
discharged at the same time
Negotiated Rulemaking
Total and Permanent Disability Regulatory Changes
• Allow “borrower’s representative” to receive all TPD notifications on behalf of the borrower
• Provide more detailed information to borrowers in letters explaining decisions to deny discharge applications
• Specify that ED will collect income documentation from borrowers during the post-discharge monitoring period on an OMB-approved form
Negotiated Rulemaking
Total and Permanent Disability Regulatory Changes
• Allow borrowers to qualify for TPD discharge based on disability notice of award for SSA disability benefits. The disability notice must state that the SSA will review the borrower’s eligibility for disability benefits once every 5 – 7 years (Medical Improvement Not Expected category)
• Borrower still subject to the 3-year post discharge monitoring period
Negotiated Rulemaking
Total and Permanent Disability Regulatory Changes
– Three revised or new TPD forms will be developed and approved through the OMB-forms clearance process:
• Applicant Representative Designation Form (New)• TPD Discharge Application Form (Revised)• Post-Discharge Monitoring Form (New)
Negotiated Rulemaking• Student Loan Issues: NPRM #2
– FFEL Repayment Disclosures– DL and FFEL Forbearance Issues– Direct Loan Minimum Loan Period for Transfer
Students in Non-term Programs– Title IV Loan Rehabilitation Issues– Repeal of Unnecessary FFEL Regulations– Modification of Direct Loan Regulations– Title IV Closed School Discharge– School Enrollment Status Reporting– Perkins Loan Issues– FFELP Administrative Wage Garnishment
NPRM #2 – Issues Affecting Perkins
• Closed School Discharge– Extends the current 90-day enrollment
window to 120 days and provides examples of exceptional circumstances
• School Enrollment Status Reporting– Amends regulations to reflect current
process and adds comparable enrollment reporting provisions to the Perkins Program
NPRM #2 – Issues Affecting Perkins
• Definition of on-time payment for a Perkins Loan rehabilitation – 20 days
• Satisfactory Repayment Arrangements and Loan Rehabilitation
• Allows assignment of a Perkins Loan without a borrower SSN if loan was made before SSNs were collected on the promissory note
NPRM #2 – Issues Affecting Perkins• Perkins Loan Deferment & Cancellation
Issues– Incorporates graduate fellowship
deferment eligibility criteria from FFEL regulations
– Addresses cancellation progression for borrowers who switch cancellation categories
– Removes debt-to-income economic hardship deferment category
– Allows break in cancellation service due to a FMLA condition
ED Initiatives
ED Initiatives• Shopping Sheet—Model Financial Aid
Award Letter – ED and Consumer Financial Protection
Bureau partnered to promote transparency in student financial disclosures
– Designed to help students better understand amount of institutional grant or scholarship aid they may receive and amount of loans recommended to cover remaining costs
– http://collegecost.ed.gov/shopping_sheet.pdf
ED Initiatives• Shopping Sheet (cont.)
– Product of extensive feedback from the public, consumer advocacy groups and higher education leaders
– In conjunction with release, Secretary Duncan published an open letter to college and university presidents asking them to voluntarily adopt the Shopping Sheet as part of their award process
– Interested institutions should contact ED at [email protected]
ED Initiatives• Financial Awareness Counseling Tool
– On-line tool to help students manage loan debt
– Brings transparency to process of debt management
– Provides students with five interactive tutorials covering topics ranging from managing a budget to avoiding default
– Provides borrowers access to individual loan history
– Accessed through StudentLoans.gov
PERKINS LOAN ISSUES
31
Perkins Loan Issues
• OMB has approved the new Perkins Loan Master Promissory Note
• No changes from current MPN• New Perkins MPN posted to IFAP on
Oct. 25, 2012 (DCL GEN-12-19)• Perkins eMPN posted to IFAP on Dec.
28, 2012 (DCL GEN-12-23)
Electronic Announcements/
DCLs
Electronic Announcements• Status of Gainful Employment
Regulations (posted July 6, 2012)– U.S. District Court for the District of
Columbia upheld the authority of the Department to regulate gainful employment programs
– However, the Court vacated most of the gainful employment regulations except provisions requiring institutions to disclose information about each of their GE programs
Electronic Announcements• COD Processing Update (posted Jan.18,
2013)• Institutional Metric Data File for the Financial
Aid Shopping Sheet (posted Jan. 18, 2013)• Deadline for 2013-2014 Underuse Penalty
Waiver for the Campus-Based Programs is February 8, 2013 (posted Jan. 16, 2013)
• Availability of Updated NSLDS Enrollment Reporting Guide (posted Jan. 11, 2013)
• Perkins Loan Portfolio Liquidation and Assignment Procedures (posted Oct. 5, 2012)
Dear Colleague Letters• DCL GEN-13-04: State Authorization
Regulations Effective Date Extension (posted Jan. 23, 2013)
• DCL GEN-13-03: Invitation to Participate in Experiments Under the Experimental Sites Initiative (posted Jan. 17, 2013)
• DCL GEN-13-02: Regaining T-IV Eligibility After Exceeding Loan Limits and Treatment of Loan Funds When a Student Fails to Begin Attendance (posted Jan. 17, 2013)
Questions
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Contact Information
Brian Smith
Office of Postsecondary Education
202-502-7551
Gail McLarnon
Office of Postsecondary Education
202-219-7048
