2006 TriRegional Meeting Borough of Manhattan Community College May 17, 2006

1
2006 Tri-Regional MeetingBorough of Manhattan
Community CollegeMay 17, 2006
New York State Financial Aid Administrators
Association (NYSFAAA)
2
2006 Tri-Regional Meeting Statewide Plan for
Higher Education, 2004-2012Joseph P. Frey,
Assistant Commisioner, NYS Education Department,
Office of Higher Education (Office of Quality
Assurance)
New York State Financial Aid Administrators
Association (NYSFAAA)
3
Statewide Plan for Higher Education, 2004-2012

• May 2006

4
Key Components

• Preparation for College
• Performance
• Financial Support
• Value Added

Collaboration
5
Preparation for College
Baccalaureate degree graduation rates in all GPA
categories increased or stayed the same from 1999
to 2004.
Associate degree graduation rates in all GPA
categories also increased or stayed the same from
1999 to 2004.
Source NYSED Office of Research and Information
Systems Annual 2.9 Graduation Rate Survey
6
Preparation for College
Source NYSED Office of Research and Information
Systems Annual 2.9 Graduation Rate Survey
7
Performance
Of the 1998 cohort who graduated, 74 graduated
in four years -
State Source NYSED Office of Research and
Information Systems Annual 2.9 Graduation Rate
Survey Federal Source NCES-IPEDS Federal
Graduation Rate Survey NYSED 2.2 Transfer
Enrollment Survey
8
Performance
Of those who complete degrees, greater
percentages of Whites and Asians than Blacks or
Hispanics finish on schedule.
Source NYSED Office of Research and Information
Systems Annual 2.9 Graduation Rate Survey
9
Performance
Based on transfer numbers and transfer graduation
rates, a projected 49.5 of the 2001 cohort will
eventually complete an associate or baccalaureate
degree somewhere.
State Source NYSED Office of Research and
Information Systems Annual 2.9 Graduation Rate
Survey Federal Source NCES-IPEDS Federal
Graduation Rate Survey NYSED 2.2 Transfer
Enrollment Survey
10
Performance
11
Performance
Academically and educationally disadvantaged
Black and Hispanic students in opportunity
programs perform almost as well as do Black and
Hispanic students overall.
Graduation at Initial Institution
Source NYSED Office of Research and Information
Systems Annual 2.9 Graduation Rate Survey
12
Performance
New York State Enrollment of Students with
Disabilities in Postsecondary Education
Source NYSED Office of Research and Information
Systems Annual Enrollment of College Students
with Disabilities Survey
Note Graduation Rate Percent of full-time,
first-time entrants to a program graduating from
their initial institutions within the specified
time period. Source NYSED Office of Research and
Information Systems Annual Survey
Students with disabilities now graduate from
baccalaureate programs at about the same rate as
students overall.
New York State Graduation Rates 6-Year
Baccalaureate Programs
Source NYSED Office of Research and Information
Systems Annual 2.9 Graduation Rate Survey
13
Financial Support
Source NASSGAP 35th Annual Survey Report on
State-Sponsored Student Financial Aid 2003-2004
Academic Year, National Association on State
Student Grant and Aid Programs
Source Postsecondary Education Opportunity,
Number 150, December 2004, page 3
14
Financial Support
TAP and Pell make college possible for New Yorks
neediest students
Annual Expenses Includes tuition, fees, room and
board, books, and supplies. No room and board was
included for students living at home, but an
off-campus room and board amount was included for
independent (no longer tax dependents of
parents) students. Transportation and other
living expenses are not included. Data Sources
National Center for Education Statistics, College
Board, NYS HEDS data system, Higher Education
Services Corporation (federal data), and college
publications Web sites. Source NYSED Office of
Research and Information Systems Annual Survey
15
Financial Support
TAP and PELL make college possible for New Yorks
neediest students.
Annual Expenses Includes tuition, fees, room and
board, books, and supplies. No room and board was
included for students living at home, but an
off-campus room and board amount was included for
independent (no longer tax dependents of
parents) students. Transportation and other
living expenses are not included. Data Sources
National Center for Education Statistics, College
Board, NYS HEDS data system, Higher Education
Services Corporation (federal data), and college
publications Web sites. Source NYSED Office of
Research and Information Systems Annual Survey
16
Financial Support
SUNY State-Operated Colleges Revenues per
Full-Time Equivalent Student, 1990-91 and 2005-06
17
Financial Support
CUNY Senior Colleges Revenues per Full-Time
Equivalent Student, 1990-91 and 2005-06
18
Financial Support
19
Value Added
Education and Training Pay
Median Earnings in 2004
Unemployment Rate in 2005
Note Earnings for year-round full-time workers
25 years and over unemployment rate for those 25
and over
Source Bureau of the Census Bureau of Labor
Statistics
20
Value Added
More women than men earn masters degrees in NY.
Almost as many women as men earned doctorates.
Source NCES IPEDS Federal Survey C.
21
Value Added
Research and Development Expenditures at
Doctorate-Granting Institutions Selected States,
2003
California doctorate-granting universities spend
1.74 times as much as New York does on R D
All sources (federal, State and local
governments, industry, institutional funds and
other sources). Source National Science
Foundation/Division of Science Resources
Statistics, Survey of Research and Development
Expenditures at Universities and Colleges, fiscal
year 2003
22
Value Added
Until 2002, the number of new nursing and
pharmacy licenses declined or stayed flat.
Source Office of the Professions, New York State
Education Department, 2004
23
Value Added
A growing shortfall in a critical area
24
Value Added
25
Next Steps

• Work the 13 Regents priorities
• Build consensus
• Show value added to elected officials and the
  public
• Use resources wisely

26
2006 Tri-Regional MeetingLUNCH
New York State Financial Aid Administrators
Association (NYSFAAA)
27
Understanding the Federal Deficit Reduction Act
New York State Financial Aid Administrators
Association (NYSFAAA)
Jennifer Trauman, Account Executive, Access
GroupWilliam J. Cavin, Vice President , HSBC
Bank Education Loan ServicesElaine Hughes,
Assistant Director of Financial Aid, Vassar
CollegeJoe Tine, Director of Pre-College
Services Bureau, HESCVera Senese, Account
Manager, Chase Education FinanceAnthony Pizzuti,
Vice President/Director of Regional Accounts,
Student Loan Express
28
Federal Deficit Reduction Act
New York State Financial Aid Administrators
Association (NYSFAAA)
Loan LimitsInterest RatesConsolidationLoan
FeesSchool as LenderGrad PLUS
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Undergraduate Loan LimitsFederal Stafford Loan
Program

• Increased annual FSL borrowing limits - loans
  certified on or after 7/1/07
• 1st year undergrad from 2,625 to 3,500
• 2nd year undergrad from 3,500 to 4,500
• No change to aggregate limits
• Undergraduates will reach aggregate limits sooner
  and thus may have increased need for private loans

30
Graduate/Professional Loan Limits Federal
Stafford Loan Program

• Increased annual unsubsidized FSL limit by 2000
  - loans certified on/after 7/1/07
• From 10,000 to 12,000
• Aggregate limits will increase
• Effectively allows grad/prof students to borrow
  up to 20,500 per academic year
• No change to subsidized Federal Stafford Loan
  annual limit of 8,500

31
Change to Fixed Interest Rate Federal Stafford
Loan Program

• Public Law 107-139 enacted February 8, 2002
  changed the interest rate structure on Federal
  Stafford/Direct and PLUS Loans
• All NEW Federal Stafford/Direct Loans with a
  first disbursement on or after July 1, 2006, will
  have fixed interest rate 6.80
• Rate remains variable for loans made prior to
  July 1, 2006

32
Federal Loan Consolidation

• Eliminated in-school consolidation and spousal
  consolidation - FCL applications received on or
  after 7/1/06 in both FFELP and Direct
• Unless otherwise specified, terms of FFELP and
  Direct Consolidation Loans must be the same
• Retains Single Holder Rule

33
Federal Loan Consolidation

• Eliminated re-consolidation as of 7/1/06
• Borrower with no existing Direct Loans is
  eligible for a Direct Consolidation Loan only if
• Trying to obtain Income Contingent Repayment
  (ICR) AND loans are delinquent and submitted for
  default aversion
• FFELP lender denies application for FFELP
  Consolidation Loan
• FFELP lender denies application for FFELP
  Consolidation Loan with Income Sensitive Repayment

34
Origination FeesFederal Stafford Loan Program

• Phase Out 3 Loan Origination Fees
• For loans with a first disbursement on or after
• 7/1/06, fee will be 2.0 (FDLP 3.0)
• 7/1/07, fee will be 1.5 (FDLP 2.5)
• 7/1/08, fee will be 1.0 (FDLP 2.0)
• 7/1/09, fee will be 0.5 (FDLP 1.5)
• 7/1/10, fee will be 0.0 (FDLP 1.0)

35
Federal Default Fee

• Guarantor Fee
• Applies to both Federal Stafford and Federal PLUS
  loans
• Guarantors must deposit 1 guarantee fee into the
  Federal Student Loan Reserve Fund
• Can be deducted from loan proceeds or by payment
  from other non-Federal sources
• Effective for loans with date of guarantee on or
  after July 1, 2006

36
School as Lender Programs

• New Requirements to Participate
• Must have met all requirements prior to the date
  of enactment of this Bill
• Bill signed into law on 2/8/2006
• Requirements must have been met by 2/7/06
• Must have made loans as a School as Lender on or
  before April 1, 2006

37
Federal PLUS Loan Program

• Graduate and professional students become
  eligible borrowers for PLUS loans certified on or
  after 7/1/06
• Fixed interest rate increased from 7.9 to 8.5
  for new loans first disbursed on or after 7/1/06

38
The Federal PLUS LoanFFELP
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The Federal PLUS LoanFFELP

• Credit Criteria 682.201(b)(2)
• Applicant cannot have adverse credit based on
  review of at least one credit report from a
  national credit reporting agency
• Lack of credit history or insufficient credit
  history is not considered adverse credit

40
The Federal PLUS LoanFFELP

• Credit Criteria 682.201(b)(2)
• Adverse credit is when at least one of the
  following apply to the applicant
• Currently 90 days or more delinquent on repayment
  of any debt
• Has had debt discharged in bankruptcy during the
  past 5 years
• Evidence of a default, foreclosure, tax lien,
  repossession, wage garnishment, or write-off of a
  Title IV debt during the past 5-years

41
Grad PLUS vs. Unsub Stafford What are the
differences for PLUS borrowers?

• Fixed interest rate of 8.5 rather than 6.8
• No grace period
• No annual or aggregate loan limits
• Requires no negative credit history
• Origination fee must be deducted from loan
  proceeds
• Not eligible for teacher cancellation provisions

42
Grad PLUS vs. Private LoansWhat are the
differences for PLUS borrowers?

• Fixed interest rate
• NO grace period
• No annual or aggregate loan limits
• Eligibility not based on credit score thresholds
• Pricing not based on credit history
• Endorser option

43
Grad PLUS vs. Private LoansWhat are the
differences for PLUS borrowers?

• Deferments AND forbearance available
• Cancellation/loan discharge provisions
• Eligible for consolidation in a Federal
  Consolidation Loan
• Can have more repayment options, including an
  income-based option

44
Federal Deficit Reduction Act Miscellaneous
Provisions
New York State Financial Aid Administrators
Association (NYSFAAA)
45
How to Make a Scarletini

• Put on a Sergio Mendes cd - perhaps Brazil 66 ?
• 3 oz. Rèmy Red Berry Infusion
• 1 1/2 oz. Vanilla-flavored vodka - Grey Goose
  unless youre a savage...
• Splash Cranberry Juice
• Splash Lime Juice
• Place all ingredients in a shaker filled with
  ice
• Shaken, not stirred, well
• Strain into a Martini glass chilled of course!
• Garnish with lemon twist or a red berry!

46
Forbearance

• Deletes the requirement that a borrowers request
  for any mandatory forbearance be in writing.
• Adds a new provision that a notice be sent to the
  borrower confirming the terms of the mandatory
  forbearance that were agreed to by both parties
  and requiring that the terms be recorded in the
  borrowers file.
• Part of original Fed Up legislation.

47
Teacher Loan Forgiveness

• Expands borrower eligibility for teacher loan
  forgiveness to individuals who are employed as
  teachers in private schools who take and pass a
  competency test of of subject knowledge and
  skills.
• Eliminates the effective date limitation for the
  period during which eligible teachers (math,
  science and special-education) must be new
  borrowers (10/1/98 to 10/1/2005) to qualify for
  the higher loan forgiveness amount that was
  authorized by the Taxpayer-Teacher Protection Act
  of 2004, and ensures the amendment is not
  affected by other legislation.

48
Disbursement

• Loans to students attending foreign schools are
  no longer exempt from the disbursement
  requirements (multiple disbursements and delayed
  delivery).
• Reinstates provisions for Low-Cohort schools
• Waives 30-day delayed delivery provision
• Disbursement of loan funds in a single
  installment for a single period of enrollment not
  longer than 1 semester, trimester, quarter, or a
  period of 4 months.

49
Military Deferment

• Up to 3 years for eligible borrowers on active
  duty during war, national emergency or military
  operation. Includes National Guard under same
  circumstances.

50
Student Institutional Provisionsunder HERA
New York State Financial Aid Administrators
Association (NYSFAAA)
51
Length of Academic Year - Clock
New York State Financial Aid Administrators
Association (NYSFAAA)

• minimum of 26 weeks of instructional time for a
  program that measures its length in clock hours
  and
• at least -
• Nine-hundred clock hours

52
Length of an Academic Year - Credit
New York State Financial Aid Administrators
Association (NYSFAAA)

• minimum of 30 weeks of instructional time for a
  program that measures its length in credit hours
  and
• at least -
• Twenty-four semester or trimester hours, or 36
  quarter hours

53
Distance EducationModification of the 50/50 Rules
New York State Financial Aid Administrators
Association (NYSFAAA)

• Courses offered by telecommunications are no
  longer considered correspondence courses.
• As a result, otherwise eligible institutions that
  offer over 50 percent of their courses by
  telecommunications, or have 50 percent or more of
  their regular students enrolled in
  telecommunications courses, are now eligible for
  participation in the Title IV, HEA programs.

54
Need Analysis Cost of Attendance - exclusions
New York State Financial Aid Administrators
Association (NYSFAAA)

• State provided assistance may be excluded from
  both Cost Of Attendance and Estimated Financial
  Assistance if that assistance is designated by
  the State to offset a specific component of the
  cost of attendance.

55
Need Analysis Cost of Attendance - inclusions
New York State Financial Aid Administrators
Association (NYSFAAA)

• Institutions now have the option of including a
  room and board component in the cost of
  attendance for a less-than-half-time student for
  up to three semesters or the equivalent at the
  institution, but no more than two of those
  semesters or the equivalent may be consecutive.

56
Need Analysis Cost of Attendance - inclusions
New York State Financial Aid Administrators
Association (NYSFAAA)

• Institutions have the option of including in the
  cost of attendance the one-time cost of obtaining
  a first professional license or certificate for a
  student who is enrolled in a program that
  requires such professional licensure or
  certification.
• This provision does not include costs associated
  with preparing the student for the test or
  examination required for licensure or
  certification unless such preparation is part of
  the eligible program.

57
Need Analysis Expected Family Contribution-
effective 2007-08
New York State Financial Aid Administrators
Association (NYSFAAA)

• Dependent Students
• Income Protection Allowance
• The income protection allowance (IPA ) for
  dependent students is changed from 2,550 to
  3,000.
• The IPA will be indexed annually for inflation
  the new base year of 2006 will be indexed for the
  2008-2009 academic year.
• Contribution from Assets Changed from 35 to
  20.

58
Need Analysis Expected Family Contribution-
effective 2007-08
New York State Financial Aid Administrators
Association (NYSFAAA)

• Independent Students w/o dependents other than
  spouse
• Income Protection Allowance The income
  protection allowance (IPA ) for a single student,
  and for a married student whose spouse is also
  enrolled in postsecondary education, is changed
  from 5,000 5,790 to 6,050.
• Married students whose spouse is not enrolled
  in postsecondary education, the IPA is changed
  from 8,000 9,260 to 9,700.
• The IPA will be indexed annually for inflation
  the new base year of 2006 will be indexed for the
  2008-2009 aid year.
• Contribution from Assets Changed from 35 to
  20.

59
Need Analysis Expected Family Contribution-
effective 2007-08
New York State Financial Aid Administrators
Association (NYSFAAA)

• Independent Students with dependents other than
  spouse
• IPA tables have not yet been published however
  for 2007-08 year only and only for this category
  of students the values of the IPA will be
  increased by the greater of the CPI or 5.
• Contribution from Assets Changed from 12 to
  7.

60
Need Analysis Qualified Education Benefits-
effective 2006-07
New York State Financial Aid Administrators
Association (NYSFAAA)

• ? The term Qualified Education Benefit now
  includes all of the following programs
• Coverdell education savings accounts, prepaid
  tuition plans offered by a State, and qualified
  tuition programs a.k.a 529 prepaid tuition plans
  and 529 savings plans.
• What is the VALUE of the asset?
• Prepaid tuition program the refund value of the
  tuition credit or certificate
• Savings plans or savings accounts the current
  balance
• Whose asset is it?
• The asset belongs to the owner of the account or
  plan as long as the owner is not a dependent
  student.

61
Simplified Needs Test Automatic Zero EFC
New York State Financial Aid Administrators
Association (NYSFAAA)

• ?

• A student may now qualify for the
  simplified needs test (SNT) and automatic zero
  EFC if the student (and spouse, if any), or the
  student's parents (if a dependent student)
  received benefits under a means-tested Federal
  benefit program during the "base year" used for
  reporting income information.
• The base year is the calendar year prior to the
  award year. (i.e 1/1/05 12/31/05 is the base
  year for the 2006-07 award year)

62
Simplified Needs Test Automatic Zero
EFCMeans-tested Federal Benefit Programs
New York State Financial Aid Administrators
Association (NYSFAAA)

• Supplemental Security Income
• Food Stamps
• Free and reduced price school lunch program
• Temporary Assistance for Needy Families (TANF)
• Special supplemental nutrition program for
  women, infants, and children (W.I.C.)
• other programs identified by the Secretary.

63
Simplified Needs Test Automatic Zero EFC
New York State Financial Aid Administrators
Association (NYSFAAA)

• Qualification for the SNT or automatic zero EFC
  is revised to require that only the parents of a
  dependent student must have filed one of the
  qualifying tax forms or was not required to file
  a tax return.
• The qualifying tax forms remain the same
• IRS Forms 1040 (for someone who was otherwise
  eligible to file a 1040A or 1040EZ, except that
  the taxpayer was seeking a specified tax credit),
  1040A, and 1040EZ, and an income tax return from
  the Commonwealth of Puerto Rico, Guam, American
  Samoa, the Virgin Islands, the Republic of the
  Marshall Islands, the Federated States of
  Micronesia, or Palau.

64
Simplified Needs Test Automatic Zero EFC
New York State Financial Aid Administrators
Association (NYSFAAA)

• The Adjusted Gross Income threshold in the base
  year has increased to 20,000 or less to qualify
  for Automatic Zero EFC.
• The income threshold for the base year for SNT
  remains 50,000.

65
Dependents
New York State Financial Aid Administrators
Association (NYSFAAA)
Simplified Needs Test

• Automatic Zero EFC

Parent(s) had adjusted gross income of less than
50,000 and Either Parent(s) not required to
file tax return or filed (or eligible to file)
1040A or EZ, or Parent or dependent
student received means-tested benefits in
previous 12 month period.
66
Independent - no spouse, no dependents
New York State Financial Aid Administrators
Association (NYSFAAA)

• Automatic Zero EFC

Simplified Needs Test
Student had adjusted gross income of less than
50,000 and Either Student not required to
file tax return or filed (or eligible to file)
1040A or EZ, or Student received
means-tested benefits in previous 12 month
period.
67
Independent w/spouse, no other dependents
New York State Financial Aid Administrators
Association (NYSFAAA)
Simplified Needs Test

• Automatic Zero EFC

Student spouse had adjusted gross income of
less than 50,000 and Either Student and spouse
not required to file tax return or filed (or
eligible to file) 1040A or EZ, or Student or
spouse received means-tested benefits in previous
12 month period.
68
Independent w/dependents other than spouse
New York State Financial Aid Administrators
Association (NYSFAAA)

• Automatic Zero EFC

Simplified Needs Test
Student and spouse, if any, had adjusted gross
income of less than 50,000 and Either Student
and spouse, if any, not required to file tax
return or filed (or eligible to file) 1040A or
EZ, or Student or spouse received
means-tested benefits in previous 12 month
period.
69
Treatment of Family Owned Businesseffective
2006
New York State Financial Aid Administrators
Association (NYSFAAA)

• If a family owns or controls a business with
  less than 100 full-time employees or its
  part-time equivalent assets are not included in
  need analysis.
• Since this was not on the 2006-07 FAFSA the
  school is expected to go back and verify and make
  appropriate adjustments.

70
Return of Title IV FundsCompletion of the 60
Percent Period- effective 2006
New York State Financial Aid Administrators
Association (NYSFAAA)

• Scheduled Hours not completed hours will be
• used to determine the percentage of the period
• completed by a student withdrawing from a clock
• hour program.
• If the student withdraws after the date they were
• scheduled to complete 60 percent of the scheduled
• hours in the payment period they earn 100 percent
• of their aid.

71
Return of Title IV FundsCompletion of the 60
Percent Period- effective 2006
New York State Financial Aid Administrators
Association (NYSFAAA)

• Compute
• Clock Hours Scheduled to be Completed
• Total Clock Hours in a Period
• Equals
• The Percentage of the Payment Period Earned

72
Return of Title IV FundsGrant Overpayment -
effective 2006
New York State Financial Aid Administrators
Association (NYSFAAA)

• The amount of a Title IV grant overpayment due
• from a student is limited to the amount by which
• the original grant overpayment amount exceeds
• half of the total Title IV grant funds received
  by the
• student. A student does not have to pay a grant
• overpayment of 50.
• For example
• Student received 250 in Title IV grant
  overpayment
• Received a total of 700 in Title IV grant.
• 700/2350
• 350 - 250 100 the student repays

73
Return of Title IV Funds
New York State Financial Aid Administrators
Association (NYSFAAA)
Leaves of Absence - effective 2006

• The institution may grant more than one leave of
• absence.
• The institution is required to contact a
  withdrawn
• student prior to making a post-withdrawal
• disbursement of loan funds and explain to the
  
• student the obligation to repay the funds and to
• confirm the funds are still required. The
  institution
• must document in the student file the result of
  the
• contact and the final determination regarding the
  
• loan disbursement.

Post withdrawal counseling - effective 2006
74
Return of Title IV Funds
New York State Financial Aid Administrators
Association (NYSFAAA)
Program Applicability - effective 2006

• Limited to
• Pell, FSEOG, FFEL, FDL, Perkins, Academic
• Competitiveness Grant National Smart Grant.
• No longer applies to
• LEAP, SLEAP, GEAR UP SSS funds
• The institution must return unearned funds within
  
• 45 days after the date that it determines the
• student has withdrawn.

Return of Funds within 45 days - effective 2006
75
Student Eligibility
New York State Financial Aid Administrators
Association (NYSFAAA)
Active Duty Military Members - effective 2006

• Individuals who are currently serving on active
  duty in the U.S. Armed Forces for purposes other
  than training have been added to the list of
  individuals who are considered to be independent
  students.
• Active Duty does not include a call to active
  duty for state purposes such as disaster relief.
  Those students would not be considered
  independent.

76
Student Eligibility Drug Offenses - effective
2006
New York State Financial Aid Administrators
Association (NYSFAAA)

• a student is ineligible for Title IV aid only if
• the conviction for a Federal or State offense
• involving the possession or sale of a
• controlled substance is for conduct that
• occurred during a period of enrollment for
• which the student was receiving Title IV aid.

77
Student Eligibility Repayment of Fraudulently
Obtained Title IV Funds - effective 2006
New York State Financial Aid Administrators
Association (NYSFAAA)

• A student who has been convicted of, or has pled
  nolo contendere or guilty to, a crime involving
  fraud in obtaining Title IV, HEA financial
  assistance must have completely repaid the
  fraudulently obtained funds to the Secretary, or
  to the holder of the loan in the case of a Title
  N, HEA loan, before regaining eligibility for
  Title IV, HEA financial assistance.

78
College Access Initiative
New York State Financial Aid Administrators
Association (NYSFAAA)
79
Lender Guarantee Agency Issues
New York State Financial Aid Administrators
Association (NYSFAAA)
80
Lender Guarantee Agency Issues
New York State Financial Aid Administrators
Association (NYSFAAA)

• Federal Default fee
• Risk Sharing
• Exceptional Performance
• Disbursement
• Wage Garnishment
• Forbearance Agreements
• Loan Collection

81
Lender Guarantee Agency Issues
New York State Financial Aid Administrators
Association (NYSFAAA)

• Federal Default Fee
• Requires the collection and the deposit into a
  GAs Federal Fund of a federal default fee equal
  to 1 of principal.
• Fee must be collected either by deduction from
  the proceeds of the loan or by payment from other
  non-federal sources.
• Effective for all loans disbursed on or after
  7/1/06.

82
Lender Guarantee Agency Issues
New York State Financial Aid Administrators
Association (NYSFAAA)

• Risk Sharing
• Reduces lender insurance from 98 to 97 for
  loans disbursed on or after 7/1/06
• No change to guarantor reinsurance
• Insurance reinsurance on exempt claims is set
  at 100 (for loans disbursed on or after 7/1/06).
  Exempt claims are claims on loans where the
  borrower provided false/erroneous info and caused
  the borrower to be ineligible for federal
  benefits.

83
Lender Guarantee Agency Issues
New York State Financial Aid Administrators
Association (NYSFAAA)

• Exceptional Performance
• Provides that lenders and servicers designated as
  exceptional performers receive 99 insurance
• No other changes

84
Lender Guarantee Agency Issues
New York State Financial Aid Administrators
Association (NYSFAAA)

• Disbursement
• Disbursement relief renewed to students at
  schools with low default rates (effective on
  enactment).
• Requires lender or GA verify enrollment of
  students who are studying outside the US in a
  study abroad program or eligible foreign
  institution.

85
Lender Guarantee Agency Issues
New York State Financial Aid Administrators
Association (NYSFAAA)

• Wage Garnishment
• Increases the amount that guarantee agencies may
  garnish without the borrowers consent from 10
  to 15.

86
Lender Guarantee Agency Issues
New York State Financial Aid Administrators
Association (NYSFAAA)

• Forbearance Agreements
• Forbearance agreements no longer need to be
  approved in writing by the borrower. However a
  lender must confirm any non-written agreement by
  sending a notice to the borrower and by recording
  the terms of agreement in the borrowers file.
• Effective for agreements entered into or
  renegotiated on or after 7/1/06

87
Lender Guarantee Agency Issues
New York State Financial Aid Administrators
Association (NYSFAAA)

• Loan Collection
• Reduces the of payments needed to rehabilitate
  a loan from consecutive payments from 12 months
  to 9 payments made within 20 days of the due
  date during 10 consecutive months.

88
Lender Guarantee Agency Issues
New York State Financial Aid Administrators
Association (NYSFAAA)

• Loan collection
• A GA may not charge a borrower collection costs
  in excess of 18.8 of the outstanding principal
  and interest of a defaulted loan that is paid off
  through consolidation
• A GA must remit that portion of the collection
  charge equal to 8.5 of the outstanding principal
  and interest on that defaulted loan.

89
Lender Guarantee Agency Issues ALL DONE !!
New York State Financial Aid Administrators
Association (NYSFAAA)
90
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