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Student Loan Update. Midwest Association of Student Financial Aid Administrators October 20, 2009 Brett Lief, President National Council of Higher Education Loan Programs. Eligible Students. College Costs. Private Loans. State Aid. Home Equity Loans. One Slide Presentation. Students. - PowerPoint PPT Presentation
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Student Loan Update
Midwest Association of Student Financial Aid Administrators October 20, 2009
Brett Lief, PresidentNational Council of Higher Education Loan Programs
One Slide Presentation
Eligible Students
College Costs
Institutional Aid
State Aid
Private Loans
Home Equity Loans
Students
Payment Options
Costs
FFEL as we knew it in 2006 is gone. It will not return.The question is, “What will student loans look like in the future?”
Building a Foundation
Investigations by NY Attorney General Andrew Cuomo
Back-to-Back Budget ReconciliationsThe Deficit Reduction Act of 2005 and the
College Cost Reduction and Access Act of 2007 reallocated approximately $40 billion to increase Pell and other student aid funding
Deficit Reduction Act Increased loan limitsNew grant programsCreated College Access Initiative
College Cost Reduction & Access Act Increased Pell Grant maximum to $5,400
over five years, e.g. cost of $11.4 billionFinancial markets disruptions interrupt all
types of credit availability
Building a Foundation
The Results
All recent increases in federal student aid occurred without one new dollar
What does the Future Hold?
Greater reliance on federal funds Federal goals could become school and state
unfunded mandates FAFSA simplification Federal Direct Perkins Loans
Federal priorities impacting school and state priorities Academic progress/graduation rates Stimulus package fund usage
Implementation of the “Golden Rule” Those who have the gold, rule!
What does the Future Hold?
Are schools on their own?Who/what will fill the service vacuum? Is navy blue the only color?
Will schools receive the support they need to serve their students?
Will transitions go smoothly?Are schools ready for the unexpected?
Are schools on their own?A Year of FFELP Services
$60 billion in defaults averted in FY 08 10,000 financial aid/college nights Over 1.4 million students and parents participated
in financial aid/college nights Over 26,0000 secondary school counselors trained 14 million brochures published -- in multiple languages 6 million phone call and email contacts 62,000 financial aid administrators trained and 5,400
technical assistance visits
NCHELP Survey, October 2009
Schools Speak Up
“How concerned are you about transitioning July 1, 2010?” 68% of schools responded that they are “very concerned” or
“extremely concerned” 8.0% are “not concerned at all”
“What sort of impact do you anticipate loan program transition costs to have on your budget?” 47% responded that the anticipated transition would have a
“significant” or “severe” impact on their budget 41% estimate that their staffing levels will be greater using the direct
loan program Best transition timeframe
24% - July 1, 2010 51% - July 1, 2011 25% - July 1, 2012
Schools Speak Up
National Association of Student Financial Aid Administrators
National Association of State Treasurers Group letter from current and former presidents of
national, regional and state student financial aid associations
Letter from Former President’s of Historically Black Colleges
President, United Negro College Fund College Auditor Letter, The Wesley Peachtree
Group Arkansas Association of Student Financial Aid
Administrators California Association of Student Financial Aid
Administrators California Community Colleges Student Financial
Aid Administrators Association Kansas Association of Student Financial Aid
Administrators Kentucky Association of Student Financial Aid
Administrators Louisiana Association of Student Financial Aid
Administrators Mississippi Association of Student Financial Aid
Administrators Missouri Association of Student Financial Aid
Personnel
Montana Association of Student Financial Aid Administrators
North Carolina Association of Student Financial Aid Administrators
New York State Financial Aid Administrators Association
North Dakota Association of Financial Aid Administrators
Pennsylvania Association of Student Financial Aid Administrators (two letters)
Rhode Island Association of Student Financial Aid Administrators
Southern Association of Student Financial Aid Association
Tennessee Association of Student Financial Aid Administrators
Texas Association of Student Financial Aid Administrators
Virginia Association of Student Financial Aid Administrators
Western Association of Student Financial Aid Administrators
Wisconsin Association of Student Financial Aid Administrators
Vermont Higher Education Council Vermont Commission on Higher Education Funding
Are schools ready for the unexpected?
Program Integrity Topics for Negotiated Rulemaking Satisfactory academic progress Monitoring grade point averages Incentive compensation Gainful employment in a recognized occupation Definition of a high school diploma for purposes of eligibility
for federal student aid Misrepresentation of information provided to students and
prospective students Retaking coursework Institutions required to take attendance for purposes of Title
IV Funds requirements
The Legislative Process
House Higher Education Priorities –Student Aid and Fiscal Responsibility Act
Student Aid and Fiscal Responsibility Act CBO “savings” of $87 billion 100% federal Treasury funding of student loans by July 1,
2010 No changes in loan amounts Subsidized Stafford Loans variable rate after 7/1/2013
T-Bill + 2.5%, capped at 6.8% Revamping the Perkins Program Mandatory Funds for Pell Grants FAFSA Simplification Funding for Community Colleges and other items Approx. $10 billion for “deficit reduction”
Passed 253 to 171 on September 18th
House Higher Education Priorities –College Access & Completion Innovation Funds
Three Funds:College Access Challenge GrantState Innovation Completion Grants Innovation in College Access and
Completion National ActivitiesFocus is on Access & RetentionStates are Primary Recipients
Schools & Non-Profits could have direct access to some funds
Senate Higher Education Priorities
HELP Committee Set to “Mark-Up”Senate Floor Consideration is NextReconciliation or Regular Order?
50 votes or 60 votes?Significant Floor Amendments?Reconciliation?
A Legislative Proposal Not Yet Considered
Proposal that Saves and Preserves School Choice and Services
Allows schools to choose a service provider, including loans originated as Direct Loans
Eliminates all differences in loan terms and conditions between FFEL and Direct loans on new loans
Allows for continued origination of loans by private non-profit lenders, albeit with required sale to ED
Proposal that Saves and Preserves School Choice and Services
Expands borrower assistance and advocacy through guarantors—includes default aversion and financial literacy
Requires servicer risk-sharing of 3 percent on loans that default during first four years of repayment
Sets aside 1/3 of college access and completion fund to support non-profits, guarantors and state agencies on financial literacy and similar outreach efforts
Proposal that Saves and Preserves School Choice and Services
Benefits:Equals the mandatory savings in the official
budget score for H.R. 3221 falls short over 10 years when discretionary
spending associated with loans is consideredEliminates school transition riskLeaves much of current servicer
infrastructure in place
Proposal that Saves and Preserves School Choice and Services
The Goal is to Preserve:Choice and competitionServices demanded by students and
schools35,000 jobs that support a successful
student loan experience
"Okay, you've convinced me. Now go out there and bring pressure on me."
President Franklin D. Roosevelt
(In response to a business delegation)
Questions
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