NASFAA Graduate & Professional Issues

Caucus (GPIC) Task Forceand Federal Update

Bob Coughlin

MASFAA GPCC Symposium

February 6, 2015

NASFAA Task Force/Caucus Project-focused

Specific topics More flexible Shorter time periods More inclusive for members to participate

Allows more members to be involved More responsive to acute needs

2014-15 GPIC Task ForceLinda Bisesi Karen McCarthyUniversity of California, Hastings College of the Law NASFAA

Bob Coughlin Emily OsbornHarvard Medical School Northwestern University Chicago Campus Deirdra Cummings Margaret Rodriguez (Commission Director)Lipscomb University University of Michigan

Jamie Esquibel Joseph SanchezUniversity of the Rockies University of North Texas Health Science Center Mary Fenton (Chair) Phyllis SchulzUniversity of New Mexico CUNY Graduate Center

David Futrell Meredith SchorNASFAA George Washington University School of Medicine and Health SciencesJohn Garcia Michigan State University College of Law

GPIC Priorities Address specific needs or objectives of G/P

community Discuss federal policy issues – effect on G/P sector

Represent a voice for the G/P community Communicate through GPIC listserv Confer with ED officials as issues arise

Provide awareness and policy impact on G/P sector

Collaborate with outside organizations supporting G/P community Ex: Access Group Financial Education Survey

GPIC Activities (June 2014 – January 2015)

Policy Discussion Topics Perkins loan program SAP (repeat coursework) Citizenship documentation requirements Preparatory coursework and gainful employment Truth in lending requirements PPY tax data PSLF ED resources for G/P students

GPIC Activities (June 2014 – January 2015)

Hold monthly conference calls with FSA/ED Loan/technical issues

Grad vs undergrad entrance/exit counseling Servicer inconsistencies, customer service NSLDS, Clearinghouse PSLF – loan forgiveness application Interest capitalization Perkins benefits Consolidation Loans: 30+ loans, save button, grace period SAP

GPIC Activities Conduct a visit to Capitol Hill (October 2014)

Talking points: End origination fees Maintain PSLF program Maintain campus-based programs (Perkins, FWS) Maintain Grad PLUS program

House Committee on Education and the Workforce congressional staff visited: Rep. Mike Kelly (R-PA) Rep. Dave Loebsack (D-IA) Rep. Caroline McCarthy (D-NY) Rep. Matt Salmon (R-AZ) Rep. Tim Walberg (R-MI)

GPIC Activities Propose G/P Discussion Topics for FSA

Conference (December 2014)

Birds of a Feather Origination fees – status Perkins program Grad PLUS counseling tool Title IV changes – effect on G/P schools Entrance/exit counseling specific to G/P students 150% rule

GPIC Activities Propose G/P sessions for NASFAA

Conference (July 2015) Educating ED and Congress about Graduate Education Financial Literacy for G/P Students Future of PSLF G/P Legislative Update G/P Orientation – Changing Practices G/P Town Hall Grad Schools: Your Map to IFAP (alternate session)

HRSA Federal Update

GPIC Activities Prepare Final Report for NASFAA Board of

Directors Address Issues Provide Recommendations Describe Rationale

NASFAA Policy Task Forces Impacting Grad/Prof Schools

Talking Points from Megan McClean

NASFAA

NASFAA PSLF Task Force Main recommendations:

Keep PSLF

Forgiveness of up to 100% of the independent, undergraduate aggregate Stafford loan limit (currently $57,500); and

50% of any remaining qualifying loan balance, up to a maximum forgiveness amount of the graduate aggregate Stafford loan limit (currently $138,500)

Consumer Information Task Force• Study the usefulness of consumer disclosures not related to

Title IV aid and determine the most effective, and least burdensome, method of disclosure.

• Eliminate the vague disclosure requirement to report the placement of, and types of employment obtained by, graduates of an institution's degree or certificate programs.

• Establish that the online entrance counseling provided by ED constitutes a compliance “safe harbor.”

• Use consistent metrics when presenting borrowing levels (ie. “median” vs. “average”).

Servicing Issues Task Force Joint task force with the Direct Loan Coalition

Focus on understanding current servicing practices and making recommendations to FSA and loan contractors on how to improve the process for borrowers

Charged with specific outcomes: A report to be delivered to ED and other relevant agencies containing

recommendations for improving federal student loan servicing, clearing indicating (1) areas of deficiency in loan servicing, (2) the extent (how widespread) of those deficiencies, and (2) proposed solutions

Servicing Issues Task Force Report released February 4, 2015 Six Recommendations:

Information/Communication/Standardization Develop a central loan portal where students can manage all of their loans Remove servicer branding from communication with borrowers ED should provide standard consumer protections that are in line with

other consumer products ED should permit the use of innovative technologies in order to allow

servicers to more efficiently and effectively communicate with students Regulatory requirements of entrance/exit counseling should be

incorporated into ED’s Final Awareness Counseling Tool (FACT) ED should develop a policies and procedures manual for servicing

Other Task Force Items of Note• Campus-based Allocation Formula Task Force

• Benchmarking Task Force

• Return of Title IV Funds Task Force

Federal Update

Talking Points from Megan McCleanNASFAA

Washington Political Climate

Washington Political Climate Partisanship, Brinkmanship and “Blame Game”

Deficit Reduction

Budget Politics Dictating Policy Continuing Resolution (CR) Omnibus Spending bill

2016 Election!

Student Aid & the Budget• Funding for student aid falls into the Labor, Health,

Human Services, and Education Appropriations Subcommittee (Labor-H)

• This is always a very complex bill because so many important programs share the same pot of funds

• Most student aid funds are“forward funded” meaning they fund the following award year• Ex: FY 2014 funds the 2014-15 award year

Where are we with Sequestration?• Still in effect—ten year cutting mechanism

• Technically in the third year

• Unlikely that it will be repealed—more likely to be replaced• President’s FY16 Budget Proposal would end

sequestration, if passed

• Continues to impact origination fees

President Obama’s FY 2016 Budget Proposal—Graduate/Professional

President Obama released FY 2016 (award year 2016-17) budget proposal on February 2, 2015

Provisions related to graduate and professional community

Similar to FY15 budget request:

Modifications to Public Service Loan Forgiveness Expansion and modifications of PAYE Expansion and modifications of Perkins Program

New:

Reforming higher education tax system

Obama Budget Request: PAYE Modifications Expand Pay As You Earn (PAYE) eligibility to all borrowers

Simplify income-driven repayment by making PAYE the only income-driven payment plan New borrowers on or after July 1, 2016

Use total household income for all married couples when calculating income-driven monthly payments

Eliminate the current payment cap that limits monthly payments to the monthly payment under 10-year standard repayment based on original loan balance

Cap the amount of interest that can accrue when a borrower’s monthly payment is insufficient to cover the interest to avoid ballooning loan balances

Extend the PAYE repayment term to 25 years before forgiveness for borrowers with federal student loan debt that is greater than the aggregate, independent, undergraduate loan limit ($57,500)  

Obama Budget Request: PSLF Modifications Cap the amount forgiven under PSLF to the aggregate,

independent undergraduate loan limit ($57,500) for all borrowers

Limit qualifying payments for PSLF to payments made in an income-drive repayment plan i.e., no payments made while in the 10-year standard repayment plan

would count

Obama Budget Request: Perkins Modifications Expand Federal Perkins loan program funding

from $1B to $8.5B/year Would allow additional 2,700 postsecondary institutions to

participate in program

Tie interest rate to that of Direct Unsubsidized Stafford loan

Eliminate interest subsidy Continue as a campus-based program

Schools continue to have some awarding discretion

Obama Budget Request: Higher Education Tax System Reforms Consolidate existing tax credits into a permanent American

Opportunity Tax Credit

Eligibility up to $2,500/year

Increase the refundable portion of the AOTC to $1,500

Eliminate tax on loan forgiveness from income-driven repayment plans

Expand AOTC eligibility to non-traditional student

Roll-back expanded tax cuts for 529 Plans This proposal has been dropped due to public and Congressional backlash

Presidential Memorandum:PAYE Expansion 6/9/14 Expand Pay As You Earn (PAYE) to previously ineligible Direct Loan borrowers

Mainly borrowers who received no loan after 10/1/11. Currently borrower must have no outstanding balance on loan made prior to 10/1/2007 and must have either received a DL disbursement on/after 10/1/2011 or received a Direct Consolidation loan for which borrower applied on/after 10/1/2011 as long as it does not include a loan made prior to 10/1/07

New regulations needed, to be effective 12/31/15 (proposed rules by 6/9/2015)

10% payment cap to struggling borrowers Goal is to help vulnerable borrowers select best repayment plan:

Delinquent/defaulted borrowers and non-completers Rehabilitation through income-based repayment

Perkins?• Authorized through September 30, 2014

• No Federal Capital Contribution (FCC) since FY 2005

• No cancellation reimbursements since FY 2010

• Eligible for, and was granted, one-year automatic extension through General Education Provisions Act (GEPA).

• ED released statement that if schools make first disbursements prior to October 1, 2015, then they are allowed to make subsequent disbursements for the remainder of award year 2015-16.

• If Congress does not proactively act to keep the program, it will expire on September 30, 2015. Predictions on this?

• Interest?

• Cost?

Perkins – Grandfathering Provision 1/30/15 Dear Colleague Letter

Students may award a new Perkins loan to a student after 9/30/15 for up to an additional five years if all of the following are met: School made at least one Perkins loan disbursement to the student on or

before 6/30/15

Student is enrolled at the same institution where the last Perkins loan disbursement was received

Student is enrolled in the same academic program for which the student received his/her last Perkins loan disbursement

Student to be awarded all DL Subsidized Loan aid first; Perkins to be awarded toward remaining unmet need (if any)

Perkins?• Where is NASFAA on Perkins?

• Reauthorization Task Force (RTF) called for the continuance of Perkins, along with the other campus-based aid programs

• Advocating for the program on Capitol Hill

• If program ceases, NASFAA’s RTF offered the following recommendations:

• Instruct the Secretary of Education to offset the amount of FCC to be returned to the federal government by the aggregate amount of unfunded reimbursement for cancellations

• Ensure that institutional contributions made in excess of the minimum required or made when there was no new FCC are also offset so that the amount due to the federal government is not overestimated

• Where is the Administration?

• Perkins Reform Proposal (Included in 6 budgets)

Reauthorization Update Three main efforts:

1) Bipartisan bill from Senator Alexander (R-TN) and Senator Bennet (D-CO).

2) Bill from Senator and Chairman of the Health, Education, Labor and Pensions Committee, Tom Harkin (D-IA)

3) Three bills from House Committee on Education and the Workforce

FAST Act: Sens. Alexander/Bennet Financial Aid Simplification & Transparency

Act• Officially introduced a month ago• Eliminate FAFSA (AGI & family size only)• Shift to one grant/one loan• Prior-prior year• Two repayment plans: IBR and 10-year• Authority for FAA to limit loan amounts• Prohibit part-time students from borrowing full annual loan

amount

Reauthorization: Sen. Harkin Higher Education Affordability Act• Prior-prior year• Eliminate origination fees• One IBR plan (auto enrollment if 150 days or more delinquent)• Private loans dischargeable in bankruptcy• Full school certification of private loans• Exclude HHS loans from definition of private loan (thanks

GPIC!)• Include private loans and HHS loans in NSLDS• Strengthen entrance and exit counseling

Reauthorization:House Ed and Workforce Simplifying the Application for Student Aid Act

Prior-prior year

Strengthening Transparency in Higher Education Act Replace College Navigator with College Dashboard

Institutional-level information (e.g., enrollment, completion rates, costs, financial aid, CDR)

Reauthorization:House Ed and Workforce Empowering Students Through Enhanced Financial

Counseling Act• Exit counseling: more borrower-specific information

• Entrance counseling would change to annual counseling

• Must be completed before acceptance of loan

• Borrowers must actively accept every loan (i.e., no passive confirmation)

Reauthorization:Other “Markers”

• Fee Free Student Loan Act, Rep. Susan Davis (D-CA)• End origination fees

• Repay Act, Senators King (I-ME) and Burr (R-NC)• Streamline repayment plans into two plans: one ten year and

one simplified income-driven repayment plan

Negotiated Rulemaking-Program Integrity and Improvement• No consensus• State authorization and Cash Management delayed• Gainful Employment final rule released November 1

• Similar to 2011 regs that were vacated by court• Big difference: elimination of program level CDR• New disclosures effective Jan. 1, 2017, current requirements

apply through Dec. 2016• All other GE rules are effective 7/1/15. Most pressing issue is

reporting. First batch due in July and goes back several years. ED just did a 2 hr webinar on just reporting, the archive should be up for viewing soon.

Negotiated Rulemaking-PLUS, Adverse Credit• Final rule published in October• ED just announced early implementation date of March 29• Main provisions:

• Loosened criteria (debts over $2,085)• If a borrower has an endorser due to adverse credit history,

they will need to complete credit counseling

Neg Reg PAYE• ED held public hearings to set the agenda this

fall: Washington, DC and Anaheim, CA• ED announced it will hold PAYE Neg Reg

this spring• Feb. 24-26• Mar 31-Apr. 3• Apr. 28-30

Questions?