Budgets, Policies, and NegRegs

1
Budgets, Policies, and NegRegs

• NYSFAAA Government Relations Committee
• March 2007

2
New York State Governors Budget

• No TAP increases
• Cutting Ability-to-Benefit would affect 8,000.
• 100 increase per student at community colleges.
• Reduce Bundy Aid by 4.2 million.
• Reduces the subsidy to teaching hospitals for
  medical residents.

3
New York State Senate Budget Proposals

• TAP
• Increase family income eligibility cap for
  minimum award from 80,000 NTI to 100,000.
• Raise the minimum award from 500 to 1000.
• Increase independent income cap from 10,000 NTI
  to 12,500.
• Adjust the TAP award schedule accordingly.

4
NYS SenateTuition Tax Credits

• Would expand tuition tax credits from maximum of
  400 to 700.
• Figured at 5 of tuition paid up to 14,000
• Student Loan Debt Relief Program
• Tax credit for graduates of NYS colleges up to
  1,000 per year.
• Must be an employed NYS resident
• Must be earning less than 50,000 per year
• Can claim for up to 5 years

5
NYS SenateMath/Science/Eng. Retention

• 1,000 grants per year of 1,000 each to
• NYS residents with undergrad. or grad. Degrees in
  math, science, or engineering technology
• Degree awarded in 2007-08 academic year or later
• Employed in any science, engineering or
  technology field (but not teaching)
• Can be claimed up to 5 years.
• 1,000 new awards per year until reaching 5,000

6
NYS SenateMath and Science Teaching Incentive
Program

• Expands this existing program from 500 awards to
  750 annually.
• Provides grants equal to SUNY tuition for
  students enrolled in approved teacher
  certification programs.
• Must agree to teach math or science in NYS for
  five years

7
NYS SenateVeterans

• Would increase the maximum tuition assistance
  grant to veterans of the Vietnam, Persian Gulf,
  Afghanistan, or Iraq Wars from 2,000 to the
  amount of SUNY tuition (currently 4,350).

8
NYS SenateIndependent Colleges

• Would restore 3.78 million for Bundy Aid that
  the Governors budget cut.

9
NYS Assembly Budget Proposal

• No TAP enrichment
• 62.38 million more than Spitzers budget for
• 15 million for SUNY operating aid
• 10 million for CUNY operation aid
• 5 increases in EOP, HEOP, SEEK, College
  Discovery, Liberty Partnerships

10
NYS Assembly

• Also
• 10 million for EOCs
• And to help prevent tuition or property tax hikes
  at the local level
• 8.16 million for SUNY community colleges
• 3 million for CUNY community colleges
• And Capital Improvements
• 75.9 million for SUNY
• 30 million for CUNY

11
FEDERAL A Continuing Resolution for current-year
(FY2007-08) spending

• The 109th Congress failed to complete this budget
  work, allowing the Democratic majority now in
  power to change the original plan.
• Called a Joint Funding Resolution, it was crafted
  by leading Democrats in both the House and
  Senate, with little input from others.
• Already passed by House, it requires Senate to
  pass it, and Bush to sign it.

12
Fed. Continuing Resolution Found Money?

• They shifted 2.3 billion from earmarks,
  military base closings, and other areas.
• Earmarks often go to colleges
• 1 Billion went to Pell Grants
• 620 million to biomedical research at the Natl.
  Insts. Of Health
• Also funds to Natl Science Found. And the Energy
  Departments Office of Science

13
Fed. Continuing Resolution Pell Grants

• Increase by 260 for 2007-08
• Maximum Grant would be 4,310

14
Federal Presidents Budget

• 2.9 Trillion (9,667 for every resident)
• Pell Grant maximum of 4,600 for 2008-09
• The 550 increase would cost 2 billion
• Rise in 200 increments to 5,400 in FY 2012

15
Fed. Presidents BudgetPell/ Need Analysis

• Pell Grants available year-round at 2 and 4-year
  schools
• Limit eligibility to the equivalent of 16
  semesters to encourage graduation
• Eliminate the tuition sensitivity rule that
  penalizes students at low cost schools
• Exclude from Needs Analysis all savings in 529
  plans

16
Fed. Presidents BudgetACG/SMART

• 1st year ACG increase from 750 to 1,125 for FY
  2008
• 2nd year from 1,300 to 1,950 for 2008
• Only 140 million of the 790 million available
  for this year has been awarded
• Modest increase in SMART Grants

17
Fed. Presidents BudgetLoans

• 2,000 increase, to 7,500, in maximum Stafford
  for 3rd and 4th years
• An increase in aggregate borrowing is presumed,
  but not clear
• PLUS interest to be reset at 8.3 for both DL and
  FFEL

18
Fed. Presidents BudgetAt What Cost?

• Eliminate SEOG
• High admin. Cost 250 times cost of Pell
• Dollars dont always go to schools serving the
  neediest, nor to the neediest at the schools
• Eliminate LEAP, Byrd Honors Scholarships,
  Thurgood Marshall Legal Education Opportunity
  Program
• No new FCC to Perkins Loans, and recall all
  Federal capital from schools

19
Fed. Presidents BudgetLender and Guarantor Cuts

• Reduce lender subsidy above current commercial
  paper rates from 2.34 to 1.84
• Increase fee to make a consolidation loan by .5
  of the amount of the loan
• Guarantors reimbursed for 95 of a defaulted
  loan, down from 97
• Decrease guarantor default collection payments,
  and changes the way account maintenance fees are
  calculated.
• Total saved 19 Billion over 5 years

20
Fed. Presidents BudgetPolicy Items

• 25 million for a voluntary pilot initiative
  that will collect and analyze student data to
  measure outcomes such as graduation rates. This
  initiative will help ensure accountability and
  transparency in higher education.
• 24 million for a new grant program to increase
  the number of speakers of critical languages
• Intends to implement ED and IRS program to verify
  income and taxes.

21
Senate Democrats FY08 Budget Resolution

• Just introduced
• Contains 6.1 billion more than the Presidents
  Budget for the Education Department
• Does not spell out spending levels for individual
  programs, but sets ceilings for broad categories.

22
COLLEGE AID MADE EZ ACT

• Introduced in House by Miller (D-CA), Chair of
  House Education and Labor Committee, and Emanuel
  (D-IL) similar bill introduced in Senate by
  Kennedy (D-MA)
• Reduces FAFSA from 5 pages to 2
• Provides a Pre-FAFSA as a forecast tool for
  H.S. juniors (similar to FAFSA4Caster from ED,
  available April 1)
• Hinges on IRS supplying the income data from tax
  returns

23
Federal Kennedys Student Debt Relief Act

• Not really a budget bill, but has major cost
  considerations.
• Would increase Pell Maximum to 5,100 for
  2007-08.
• 300 increases each year to a maximum of 6,300
  in 2011-12.
• Would make funding an entitlement.

24
Fed. Debt Relief ActStudent Loan Interest

• Would match HR5, passed by the House, by cutting
  interest rates on subsidized, undergraduate
  student loans to 3.4 by 2011-12.

25
Fed. Student Debt Relief Act Student Aid Reward
Program (STAR)

• Encourages colleges to utilize the student loan
  program that is most cost-effective for
  taxpayers.
• 50 of the savings shared with the colleges after
  5 years participation.
• Could supplement awards to Pell Grant recipients,
  or make grants to low-or-middle income graduate
  students.

26
Fed. Student Debt Relief ActOther Loan Reforms

• Direct Lending origination fees become optional
  at the discretion of the Secretary of Education.
• DL fees would be reduced another 1 during the
  current phase-out period.
• Corresponds to the 1 Default Fee charged to
  FFELP borrowers
• In-School consolidation resurrected.
• Reconsolidation would become possible.

27
Fed. Student Debt Relief ActHardships

• Partial Financial Hardship deferment category
  created
• Would limit monthly payments to 15 of borrowers
  income that exceeds 150 of poverty for their
  family size.
• Would allow unlimited length of hardship
  deferments.
• Would cancel any remaining debt after 25 years of
  being in a hardship or partial hardship category.

28
Fed. Student Debt Relief ActIncome Tax Deduction

• Would increase the income tax tuition deduction
  from 4,000 to 8,000 in 2007
• To 12,000 in 2008
• Income limits to qualify would be increased based
  on inflation.
• Tax deductions for interest paid would become
  credits.
• Qualifying income tied to inflation

29
NEG/REGs

• ACG/SMART Grants

30
NegRegs Modify Definition of Academic Year to
be Consistent with how Institutions Measure
Progress?

• ED says it cant, as the term has a long-standing
  definition based on credits (or clock hours) and
  weeks.

31
NegRegs Mandatory Participation

• All Pell-eligible schools must participate in the
  ACG/SMART programs
• In cases of visiting status, the school that
  pays Pell must also pay ACG/SMART grants

32
NegRegs Eligible Program

• Certificate programs will continue to be
  ineligible for ACG/SMART

33
NegRegs Eligible Majors

• Set up a procedure for schools to petition for
  additional eligible majors
• Set up procedure to validate a students intent to
  declare a major that is eligible at schools where
  students dont have to declare majors until after
  start of the junior year.

34
NegRegs Unresolved Areas

• Treatment of credit earned through AP/IB, and
  credit earned in H.S. through dual-credit and
  early college programs
• These issues related to academic year progression
  and GPA calculation

35
NegRegs Loan Issues

• Preferred lists OK if
• Student is not prevented from choosing any lender
• Contains at least 3 lenders
• Does not contain any lender that has offered or
  that has been solicited to offer by a school
  any financial or other benefit to be part of the
  list

36
NegRegs Prohibited Inducements

• Payments or offerings of any kind including
  prizes to the prospective borrower in exchange
  for a loan application
• Payments or offerings of any kind to a school, or
  any school-affiliated organization in exchange
  for loan applications
• Payments to any student acting as a lenders
  representative at a school to try to secure loan
  applications

37
More Prohibited Inducements

• Payment of referral or processing fees to another
  lender that exceeds reasonable compensation for
  the handling and marketing of FFEL loans by the
  processing lender that are based on the volume or
  dollar amount of originated FFEL loans

38
More Prohibited Inducements

• Payment of entertainment expenses for employees
  at a school or any school-affiliated
  organization, including
• Private hospitality suites
• Tickets to show or sporting events
• Meals or alcoholic beverages
• Lodging, rentals, transportation or any other
  expense related to lender-sponsored social
  activities
• The undertaking of any philanthropic activities
  such as scholarships in exchange for applications
  or to be placed on a preferred lender list
• Preferential rates to other lender products
• Computer hardware or software
• Printing or distribution of college materials

39
NegRegs Approved Activities

• Assistance to schools comparable to that provided
  by ED to schools in DL
• Temporary, emergency staffing services to a
  school
• Support of a guarantor agencys college access
  and outreach activities
• Meals, and receptions that are scheduled in
  conjunction with open meetings or conferences
• Toll free phone numbers for use by schools

40
More Approved Activities

• Borrower benefits such as origination fees,
  reduced interest rate, or benefits that require
  one or more scheduled payments
• Payment of a default fee by guarantors
• Reasonable travel and lodging costs by
  guarantors only to facilitate school staff
  training, guarantor service facility tours, or
  for schools to participate in the activities of
  an agencys governing board, etc.
• Items of nominal value that are given as tokens
  of good will

41
NegRegs GradPLUS Entrance Counseling

• If a student doesnt request their maximum
  Stafford loan, the school must provide a
  comparison that shows
• The maximum interest rates in both programs
• The different interest accrual rates
• The different repayment start dates
• All GradPLUS borrowers must get entrance
  counseling in the same manner as Stafford Loan
  Borrowers

42
NegRegs Length of a Loan Period

• Institutions will be allowed to certify a single
  loan for students in non-term or nonstandard term
  programs in excess of 12 months.
• You would still use the definition of an academic
  year as defined in 34 CFR 668.3, but would no
  longer need to worry about exceeding a 12-month
  period.

43
NegRegs Other Areas of Regulation

• Frequency of Capitalization only at the end of
  a deferment/forbearance period
• Simplification of Deferment Granting Process
  you can grant a deferment if another FFEL lender
  or ED has granted a deferment for the same
  reason, for the same time period, unless you have
  conflicting information. This is simple?

44
House Committee asks for Help

• We invite you to share with us your best
  ideas.

45
HigherEdRecs_at_mail.house.gov

• Increasing college access and success
• Improving the financial aid delivery system
• Improving academic, financial, and social college
  preparation for students
• Improving programs designed to distribute and
  leverage need-based student aid
• Address increasing college costs
• Increasing transparency of college costs and the
  accreditation process

46
ACG/SMART Grant Training

• A Series of ED Workshops

47
http//www.ed.gov/offices/OSFAP/training/index.htm
l

• April 18 Hartford, CT
• May 8 NYC
• May 10 Newark, NJ
• May 15 - Boston
• May 16 Syracuse
• June 19 Randolph Center, VT