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U.S. Department of Education

Federal UpdateDavid BergeronDavid Bergeron

Office of Postsecondary EducationOffice of Postsecondary EducationDan MadzelanDan Madzelan

Office of Postsecondary EducationOffice of Postsecondary EducationJeff BakerJeff Baker

Federal Student AidFederal Student Aid

Appropriations andBudget Submission

FY 2006 Program Budgets(dollars in thousands)Award Year President's Final

2005-06 Request AppropriationPell Grant $ 12,364,997 $ 13,652,000 $ 13,045,230

(Max Award) $4,050 $4,150 $4,050 (Shortfall) $ - $ 4,300,821 $ 4,300,000

FSEOG $ 778,720 $ 778,720 $ 770,933 FWS $ 990,257 $ 990,257 $ 980,354 Perkins $ - $ - $ - (Cancellations) $ 66,132 $ - $ 65,471 LEAP $ 65,643 $ - $ 64,987 Math/Science $ 50,000

Program

FY 2007 Budget Request Appropriations

FY 2005 FY 2006 FY 2007*(AY 05-06) (AY 06-07) (AY 07-08)

Pell Grant $12,364,997,280 $13,045,230,000 $12,738,770,000 (Max Award) $4,050 $4,050 $4,050 FSEOG $ 778,720,000 $ 770,932,800 $ 770,932,800 FWS $ 990,257,056 $ 980,354,485 $ 980,354,485 Perkins $ 66,131,680 $ 65,470,363 $ - LEAP $ 65,643,000 $ 64,987,000 $ - Acad Comp& SMART $ - $ 790,000,000 $ 850,000,000

Program

* President's FY 2007 Budget Submission

FY 2007 Budget Request Aid AvailableFY 2006 FY 2007*

(AY 06-07) (AY 07-08)Pell Grant $ 12,745,900,000 $ 12,986,000,000 (Max Award) $4,050 $4,050 FSEOG $ 975,900,000 $ 975,900,000 FWS $ 1,172,000,000 $ 1,172,000,000 Perkins $ 1,135,000,000 $ 133,000,000 LEAP $ 165,000,000 $ - AC/SMART $ 790,000,000 $ 850,000,000 Loans $ 60,577,000,000 $ 66,082,000,000 TOTAL $ 77,560,800,000 $ 82,198,900,000

Program

* President's FY 2007 Budget Submission

FY 2007 Budget RequestFederal 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

FY 2007 Budget RequestCampus-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

FY 2007 Budget Request

FFEL and Direct LoansNo changes proposed for Loan Programs

– See Higher Education Reconciliation ActOther Programs

No funding requested for—– LEAP, GEAR UP, Upward Bound, Talent

Search, and Byrd Honors Scholarship

Higher Education Reconciliation Act of

2005(HERA)

Institutional and Program Eligibility

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

Loan Programs

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

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.

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.

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.

FFEL and Direct LoansCONSOLIDATION 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

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

Cost of Attendance (COA)

Need Analysis and Packaging

COST OF ATTENDANCE

COA for less than half-time students may include room and board costs, at school’s option

COA may include, at school’s option, the one-time cost of obtaining the first professional license or certification

CALCULATION OF EFC - 2006-2007SIMPLIFIED 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 student’s

tax return for both SNT and Auto-Zero EFC Tax return alternative if family received benefits

from a Federal means-tested program

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

CALCULATION OF EFC – 2007-2008

Income Protection AllowancesIncreases Income Protection Allowances.

Asset Assessment RatesDecreases Asset Assessment Rates

Student Eligibility

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.

Return of Title IV Aid

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

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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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

Both Programs

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Authorization and Funding• Funding for these programs is not subject to

annual appropriations process: 2006-07 -- $790 million2007-08 -- $850 million2008-09 -- $920 million2009-10 -- $960 million2010-11 -- $1.01 billionIf funding insufficient, ratable reduction.No reduction for 2006-07Funds not spent in one year are carried over to

subsequent years.

Both Programs

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Award AmountsACG – First Academic Year of student’s program of study

$750 Second Academic Year of student’s program of study

$1,300National 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.

Both Programs

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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

Eligibility Requirements ACG

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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

ACG

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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

Eligibility Requirements

ACG

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Options for Rigorous Program

1. 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

ACG

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Options for Rigorous Program

2. A set of courses as outlined in the Secretary’s 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

ACG

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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

ACG

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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.

Applicant Self-Identification Process

ACG

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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).

ACG

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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 school’s determination that student completed a rigorous program.

NSLDS will store the data

ACG

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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.

ACG

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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

student’s eligible program No rigorous high school program required

Eligibility Requirements

SMART Grant

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Computer Science Engineering Technology Life Sciences

Mathematics Physical Sciences Designated

Foreign Languages

Identified by CIP* code in DCL GEN-06-06*Classification of Instructional Program

National SMART Major Fields of Study

Major Fields of Study

SMART Grant

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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, intentGPAFulltime Enrollment

Eligibility DeterminationSMART Grant

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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

Both Programs

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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

Both Programs

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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

Both Programs

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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

Both Programs

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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

Both Programs

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Reporting of Awards and Payments 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

Both Programs

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Questions