WASHINGTON, DC UPDATE

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WASHINGTON, DC UPDATE

• 30 Minutes of Peace, Love, Politics!!!

Scott E. Miller Director of Federal
Relations PHEAA October 15, 2008
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Theres a Lot to Cover

• Congressional Actions
• State of the Credit Markets
• Proposals for Simplifying Student Aid
• 20 Days and Counting.

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110th Congress Did What??

• Reauthorization of the Higher Education Act
  Finally is Finalized
• Higher Education Opportunity Act
• Signed into law on August 14, 2008
• Extends programs until 9/30/2014
• Sponsors Claim HEOA
• Encourages colleges to rein in price increases
  and provide consumers with helpful information
• Restores integrity and accountability to the
  student loan programs
• Simplifies the federal student aid application
  process
• Expands college access and support for low-income
  and minority students
• Increases college aid and support for veterans
  and military families

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Reauthorization Reality Check

• No Teeth To College Cost Containment
• Websites, disclosures lists
• State Maintenance of Effort watered down
• Numerous new reporting requirements for
  postsecondary schools
• Largely Duplicates November 2007 regulations On
  Inducements PLLs
• Restrictions on private loans are new
• FAFSA Simplification, But Not Program
  Simplification
• Very Little New Money For Veterans Or
  Low-income Students
• Lots And Lots Of Studies

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Reauthorization Begets Negotiated Rulemaking

• Public Hearings Wrapping Up
• ED website http//www.ed.gov/policy/highered/leg
  /hea08/index.htmlneg-reg
• Hearing transcripts available
• Written comment window closed
• Subsequent Federal Register Notices
• Announce Neg-Reg teams
• Solicit nominations for negotiators
• Expect to Begin Negotiations in February 2009

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Appropriations

• Continuing Resolution Through March 6, 2009
• Level Funding for Student Aid Programs
• 2.5 Billion to Cover 6 Billion Pell Grant
  Shortfall
• Prohibition on reducing Pell awards made through
  March 6th
• What happens when mandatory funds run out?

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The Credit Markets You

• Emergency Economic Stabilization Act of 2008
• Signed into law on October 3, 2008
• Attempts to address underlying causes of frozen
  financial markets
• Student Loan-backed Securities Could Be Purchased
  By Treasury
• Treasury may purchase non-mortgage assets to
  promote market stability
• Treasury Will Be Acquiring Assets With Value
• Dont Expect Instant Results

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Ensuring Continued Access to Student Loans Act
(ECASLA)

• ECASLA Provides Temporary Relief for Student Loan
  Providers
• ED purchases student loans
• ED takes participation interest in student
  loans
• ECASLA Extended for One Year
• Provides stability for 2009-10 Academic Year
• Allows time for credit market recovery

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ECASLA Issues

• How Many Loans Will be Sold to ED?
• Can ED handle the volume?
• ED Requires that Loans Be Moved to ED Servicer
• ECASLA permits loan to remain at current servicer
• Lack of continuity for borrowers
• Capacity concerns
• Complex processes
• Many Lenders Cannot Participate
• Act does not allow for advances for loan
  originations
• Lenders need to obtain short-term credit
• ECASLA is Limited in Scope
• ED Has Not Fully Implemented ECASLA
• HR 7072 Addresses Some of These Issues

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Student Aid Simplification

• College Boards Rethinking Student Aid Study
  Group
• HEOA
• Secretary Spellings
• Focus is on the FAFSA
• 6 or fewer data elements
• Use of IRS data
• Link Pell eligibility to IRS 1040 data elements

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Student Aid Simplification

• Items In Need of Review
• Utility of higher education tax credits
  deductions
• How simple to make the FAFSA
• Will states and schools need extra information?
• One grant, one loan, one work program
• When to provide student loan subsidies
  (in-school? in repayment?)
• Utility of loan forgiveness programs

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20 Days

• PA Remains a Key Battleground
• Is There Time for an Election-Altering Event?
• Congressional Outcome Significant
• Democratic House majority expected to expand
• Is 60 vote Senate majority within reach?
• Will New Secretary of Education Be Focused on
  K-12 or K-Graduate?
• Lame Duck Congressional Session in November
• Congress Resumes in January
• Another 100 hour agenda?
• Budget Reconciliation?
• Will the economy still dominate the agenda?

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WASHINGTON, DC UPDATE

• 30 Minutes of Peace, Love, Politics!!!

Scott E. Miller Director of Federal
Relations PHEAA October 15, 2008