U.S. Department of Education

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U.S. Department of Education Federal Update

David Bergeron Office of Postsecondary
Education Dan Madzelan Office of Postsecondary
Education Jeff Baker Federal Student Aid
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Appropriations andBudget Submission
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FY 2006 Program Budgets(dollars in thousands)
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FY 2007 Budget Request Appropriations
President's FY 2007 Budget Submission
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FY 2007 Budget Request Aid Available
President's FY 2007 Budget Submission
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FY 2007 Budget Request

• Federal Pell Grant Program
• Maximum award for 2007-2008 remains at 4,050
• Year-round Pell Grants
• Eligibility limited to equivalent of 16 semesters
• Tuition sensitivity award rule eliminated

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FY 2007 Budget Request

• Campus-Based Programs
• No changes for FSEOG and FWS programs
• Perkins Loan Program
• No funding for FCC or for loan cancellations.
• Repayment to ED for collections by school from
  borrowers

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FY 2007 Budget Request

• FFEL and Direct Loans
• No changes proposed for Loan Programs
• See Higher Education Reconciliation Act
• Other Programs
• No funding requested for
• LEAP, GEAR UP, Upward Bound, Talent Search, and
  Byrd Honors Scholarship

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Higher Education Reconciliation Act of 2005
(HERA)
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Institutional and Program Eligibility
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INSTITUTIONAL PROGRAM ELIGIBILITY

• Definition of academic year for clock hour
  programs
• 50 rule does not apply to telecommunications
• Programs of distance education must be
  specifically accredited
• Short-term telecommunications programs are
  eligible
• Provision for programs using assessment to
  measure progress

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Loan Programs
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FFEL and Direct Loans

• PLUS Eligibility to Graduate Students Extends
  eligibility for PLUS Loans to graduate and
  professional students.
• All eligibility criteria remain including credit
  checks and no in-school status. However, student
  would be eligible for an in-school deferment.
• Student must file FAFSA
• Effective for any loan certified or originated on
  or after July 1, 2006

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FFEL and Direct Loans

• Effective for loans certified or originated on or
  after July 1, 2007
• Loan Limits in FFEL and Direct Loan
• Increases annual base loan limits for -
• First year students from 2,625 to 3,500
• Second year students from 3,500 to 4,500
• Aggregate loan limits are not increased.

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FFEL and Direct Loans

• Effective for loans certified or originated on or
  after July 1, 2007
• Increases annual additional unsubsidized for --
• Graduate students to 12,000
• Prep for Grad Program 7,000
• Teacher Certification to 7,000
• Aggregate loan limits are not increased.

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FFEL and Direct Loans

• FFEL PLUS Loan Interest Rate
• Fixed interest rate for new loans made on or
  after July 1, 2006 from 7.9 to 8.5 percent.
• Direct PLUS loans will remain at a fixed rate of
  7.9 percent.
• Effective date is for loans first disbursed on or
  after July 1, 2006.
• NOTE New Stafford Loan interest rates for new
  loans in both programs will be fixed at 6.8
  percent.

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FFEL and Direct Loans

• CONSOLIDATION LOANS
• Generally no re-consolidation
• Applies within and across programs
• Eliminates In-School consolidations in Direct
  Loans and early conversion to repayment
  consolidations in FFEL
• Eliminates Joint Consolidations
• Effective July 1, 2006

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FFEL and Direct Loans (Perkins)

• Active Duty Military Deferment
• Provides for a military deferment of up to three
  years for FFEL, Direct Loan, and Perkins Loans
  that were first disbursed on or after July 1,
  2001. Includes definitions of active duty
• Effective July 1, 2006

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Cost of Attendance (COA)Need Analysis and
Packaging
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COST OF ATTENDANCE

• COA for less than half-time students may include
  room and board costs, at schools option
• COA may include, at schools option, the one-time
  cost of obtaining the first professional license
  or certification

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CALCULATION OF EFC - 2006-2007

• SIMPLIFIED NEEDS TEST AND AUTO ZERO EFC
• Increases to 20,000 the threshold under which a
  family would automatically have an EFC of zero
• Eliminates consideration of dependent students
  tax return for both SNT and Auto-Zero EFC
• Tax return alternative if family received
  benefits from a Federal means-tested program

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CALCULATION OF EFC - 2006-2007

• Treats all 529 Pre-Paid and Tuition Savings Plans
  as assets of the owner, unless the owner is the
  dependent student
• Excludes small-businesses from assets
• Adds active duty military to the criteria that
  makes a student independent

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CALCULATION OF EFC 2007-2008

• Income Protection Allowances
• Increases Income Protection Allowances.
• Asset Assessment Rates
• Decreases Asset Assessment Rates

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Student Eligibility
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• DRUG CONVICTION
• Provides that an applicant loses eligibility for
  Title IV aid only if the drug related offense for
  which he or she was convicted occurred while the
  student was receiving Title IV aid.

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Return of Title IV Aid
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RETURN OF TITLE IV AID (R2T4)

• Excludes LEAP/SLEAP
• Specifies that scheduled clock hours are used to
  determine earned aid
• Clarifies that multiple leaves of absence are
  permitted
• Limits a grant overpayment due from a student to
  the amount by which the original overpayment
  amount exceeds half of the total grant funds
  received by the student

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RETURN OF TITLE IV AID (R2T4)

• Requires institution to contact a student prior
  to making a late or post-withdrawal disbursement
  of loan funds
• Requires institution to return funds no later
  than 45 days after the date that it determines
  the student has withdrawn
• Provides that a student does not have to repay
  grant overpayments of 50 or less

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• ACG and National SMART Grants

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Both Programs

• Rules and Regulations
• Interim Final Regulations published on July 3,
  2006
• Invitation to comment through August 17, 2006
  for possible changes for 2007-2008
• Negotiated Rulemaking to begin in fall for
  2008-2009 and beyond.
• Watch for IFAP announcements

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Both Programs

• Authorization and Funding
• Funding for these programs is not subject to
  annual appropriations process
• 2006-07 -- 790 million
• 2007-08 -- 850 million
• 2008-09 -- 920 million
• 2009-10 -- 960 million
• 2010-11 -- 1.01 billion
• If funding insufficient, ratable reduction.
• No reduction for 2006-07
• Funds not spent in one year are carried over to
  subsequent years.

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Both Programs

• Award Amounts
• ACG
• First Academic Year of students program of study
• 750
• Second Academic Year of students program of
  study
• 1,300
• National SMART Grant
• Third and fourth academic year of undergraduate
  study
• 4,000 per year for each of 2 years
• Note There will be second year ACG and both
  third and fourth year National SMART Grants in
  2006-07.

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ACG
Eligibility Requirements

• U.S. Citizen
• Federal Pell Grant recipient
• First or second year student in a two or four
  year degree program
• Full-time enrollment
• No specific major required

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ACG

• Eligibility Requirements
• 1st year students
• May not have been previously enrolled in a
  program of undergraduate education
• Have completed secondary school program of study
  after January 1, 2006
• 2nd year students
• Have completed secondary school program of study
  after January 1, 2005
• Have a 3.0 G.P.A. in an eligible program

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ACG
Eligibility Requirements

• Student must have completed a rigorous secondary
  school program of study
• ED has outlined options to meet requirement in
  DCL GEN-06-08 and in the interim regulations

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ACG
Options for Rigorous Program

• State Designated Program
• State Submitted Program
• An advanced or honors secondary school program
  established by a state and in existence for the
  04-05 or 05-06 school year
• State Scholars Initiative

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ACG
Options for Rigorous Program
2. A set of courses as outlined in the
Secretarys May 2 letter to states. 3. Completion
of at least two Advanced Placement courses with
passing test score of 3 or two International
Baccalaureate courses with passing test score of
4
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ACG
Options for Rigorous Program

• Courses Similar to State Scholars Initiative
• 4 years of English
• 3 years of math (Algebra I and above)
• 3 years of science (Bio, Chem, Physics)
• 3 years of social studies
• 1 year of a foreign language

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ACG
Applicant Self-Identification Process

• Department notifies potentially eligible students
  of how to provide additional eligibility
  information.
• Student provides additional information on
  website or calls toll-free number.
• Department sends student responses to schools.

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ACG
Documenting Rigorous Program

• Institutions are responsible for determining the
  eligibility of students who ED reported as having
  self-identified eligibility.
• On at least the standard(s) selected by the
  student.
• Institutions are also able to identify eligible
  students based on records they have (e.g., high
  school transcripts, test scores).

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ACG
Documenting Rigorous Program

• Documentation from cognizant authority can be
  provided by
• The student
• Directly from cognizant authority
• Home schooled students, the parent or guardian is
  the cognizant authority
• For transfer students, an institution may rely on
  another schools determination that student
  completed a rigorous program.
• NSLDS will store the data

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ACG
Grade Point Average

• For second academic year ACG, student must have a
  GPA of at least 3.0 from the first academic year.
• Only determined one time, prior to first
  disbursement of second academic year award.
• Special rule for transfer student
• For student who transfers after completing first
  academic year, the new school must calculate GPA
  using the grades from all coursework accepted
  from prior schools.

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SMART Grant
Eligibility Requirements

• U.S. Citizen
• Pell Grant recipient for same payment period
• Third or fourth year student in a four year
  degree program
• Full-time enrollment in an eligible major
• Cumulative 3.0 GPA on a 4.0 scale in students
  eligible program
• No rigorous high school program required

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National SMART Major Fields of Study
SMART Grant
Major Fields of Study

• Computer Science
• Engineering
• Technology
• Life Sciences

• Mathematics
• Physical Sciences
• Designated Foreign Languages

Identified by CIP code in DCL GEN-06-06 Classifi
cation of Instructional Program
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SMART Grant
Eligibility Determination

• No student self-identification as in ACG
• Institutions are responsible for reviewing
  records to identify all eligible students
• ISIR for Pell Eligibility, Citizenship, and
  other Title IV eligibility requirements
• Academic Records for
• Eligible Major or, if available, intent
• GPA
• Fulltime Enrollment

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Both Programs

• Disbursements
• Funds maintained and disbursed according to Title
  IV cash management rules.
• Disbursements made on payment period basis.
• If disbursement is for a cross-over payment
  period, Pell Grant and ACG/National SMART Grant
  must be assigned to same award year

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Both Programs

• Disbursements
• Student may not receive ACG or National SMART
  concurrently from more than one school
• ACG and National SMART must be received from same
  school from which Pell Grant is received

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Both Programs

• Need Based Grants
• Total of EFC and all estimated financial aid
  cannot exceed cost of attendance
• ACG and National SMART may not replace EFC in
  need equation
• May reduce other aid, including FSEOG, to avoid
  an overaward.
• May reduce ACG/National SMART award to avoid an
  overaward.
• Special treatment of VA benefits
• No overaward tolerance

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Both Programs

• Availability of Funds
• Initial authorizations in GAPS and COD with
  Electronic Statements of Account (ESOA) on July
  29, 2006.
• Not like campus-based.
• No institutional allocation,
• Like Pell or Direct Loans
• First draw downs from GAPS available first week
  of August 2006
• Schools will receive separate authorization for
  each program

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Both Programs

• Reporting of Awards and Payments
• COD XML Common Record --
• Student name
• Student SSN
• Student date of birth
• Student citizenship
• Student grade level
• Award amount
• Disbursement amount

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Reporting of Awards and Payments
Both Programs

• For ACG Eligibility Reason Code
• State Designated Program 01
• Six-digit program code found on
• On flat file
• On FAA Access
• On list posted to IFAP
• AP/IB 02
• List of Courses 03
• For National SMART Grant
• Major/CIP code

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Questions