1 Federal Policy Making Exercise Your Rights April 16, 2008 ILASFAA Annual Conference Vicki Shipley National Council of Higher Education Loan Programs.

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Federal Policy Making Exercise Your Rights

April 16, 2008ILASFAA Annual ConferenceVicki ShipleyNational Council of Higher Education Loan Programs (NCHELP)

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Agenda Process Overview and Key Players

House Senate Administration

Higher Education Act Reauthorization (will it ever happen?)

Negotiated Rulemaking 2008 Elections Your Role and Responsibilities

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Legislation vs. Regulation Legislation

Congress adopts with Presidential signature or after overriding a veto

Amends the U.S. Code -- the “statute” (e.g., Higher Education Act)

Public Laws (110-XX)

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Legislation vs. Regulation Regulation

Promulgated by appropriate federal agency U.S. Department of Education for higher education programs Reviewed by Office of Management and Budget (OMB)

Interprets and adds detail to statute

Amends Code of Federal Regulations (C.F.R.)

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Authorization vs AppropriationAuthorizing Legislation

Introduced by a Representative or Senator to Amend or Create a Federal Statute, such as, Higher Education Act (HEA)

Creates programs Authorizes expenditure ceilings

Appropriating Legislation Budget Bills Determines the actual amount of funding, usually

less than the amount appropriated

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LEGISLATIVE PROCESS(In a nutshell….so to speak!) Authorization Legislation: Introduced by a

Representative or Senator to Amend or Create a Federal Statute Legislation assigned to “Committee(s) of Jurisdiction” Chairman assigns to Subcommittee Hearings held on major legislation Higher Education Act to be “Reauthorized” every six years

Appropriations Legislation: Sets Annual Funding Levels for Federal Programs (aka discretionary spending)

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LEGISLATIVE PROCESS(It Takes Two To Tango!) Other Chamber (House or Senate) Must Act --

Two Options: Considers similar legislation at its own pace

Passes a bill that can be matched up with one passed by the other chamber

Differences must be reconciled before enactment is possible Receives legislation after other chamber acts

May approve identical bill or make amendments

“Back & forth” process, until identical bill is approved

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LEGISLATIVE PROCESS(Final Action)

Conference Committee Attempts to resolve differences between House and Senate-

passed bills Result is a “Conference Report” -- includes explanatory

language and recommendations Identical Conference Report must be approved by House and

Senate before it can be sent to the President

President signs or vetoes

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Education & Labor Committee

Higher Education, Lifelong Learning & Competitiveness Subcommittee

George Miller (D-CA)Chairman

Howard P. “Buck” McKeon (R-CA)Ranking Member

Rubén Hinojosa (D-TX)Chairman

Ric Keller (R-FL)Ranking Member

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Health, Education, Labor & Pensions Committee

Children & Families Subcommittee

Edward Kennedy (D-MA)Chairman

Michael Enzi (R-WY)Ranking Member

Chris Dodd (D-CT)Chairman

Lamar Alexander (R-TN)Ranking Member

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HEA Reauthorization

Senate reauthorization: S. 1642 (passed 95-0 on July 24, 2007) The Higher Education Amendments of 2007

House reauthorization: H.R. 4137 (passed 354-58 on February 7, 2008) The College Opportunity and Affordability Act

Conference going on now at the staff level HEA extended until April 30, 2008 Student loans “reauthorized” via the two

reconciliation bills (HERA and CCRAA)

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HEA ReauthorizationBoth the House and the Senate reauthorization bills address: • Student Loan Sunshine provisions• Preferred lender lists• Increase Pell Grant authorization levels• Address other discretionary grant programs• Authorize the Perkins Program• Needs Analysis • FAFSA Simplification• Institutional PPA • Many new extra disclosures

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The US Department of EducationSecretary: Margaret Spellings

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Lawrence WarderChief Financial Officer / Acting COO, FSA

Sara Martinez TuckerUnder Secretary

Diane Auer JonesAssistant Secretary, Postsecondary Education

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Negotiated Rulemaking (Neg Reg)Secretary of Education’s Responsibility Advise Congress

Propose Legislation Provide Technical Assistance Assist with Constituent Issues

Regulates Where Needed Enforces Laws and Regulations Communicates with Interested Parties and the Public

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Negotiated Rulemaking (Neg Reg)

Required by the HEA (Section 492A) All parts of Title IV – All the time Goal: To develop Notices of Proposed

Rulemaking (NPRM) that reflects a final consensus of the negotiating committee

Consensus: There must be no dissent by any member of the committee (includes ED) to have reached consensus

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Neg Reg 2008 Negotiated Rulemaking (Neg Reg)

New regulations effective 7/1/08 from 2007 Neg Reg – inducements, preferred lender lists etc.

2008 neg reg topics: Direct Loan Public Service Loan Forgiveness Income Based Repayment (IBR) Conforming Economic Hardship Deferment with IBR Definition of Not-For-Profit Loan Holder Harmonizing HEROES Waivers with other Benefits Provided to Returning and

Active Duty Military Final Loans Team Meeting: April 14 - 15, 2008 Regulations will be effective July 1, 2009 and must be

published in final form by November 1, 2008 Don’t forget to read the preamble!

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Income-Based Repayment New repayment option available 7/1/2009 for

borrowers experiencing “partial financial hardship”

Eligibility and minimum monthly payment is re-evaluated annually

Government pays the interest on qualifying subsidized Stafford loans for not more than 3 years (not counting periods of Economic Hardship deferment)

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Income-Based Repayment The repayment period can extend beyond 10

years regardless of the amount of the eligible debt but not beyond 25 years

Includes a loan forgiveness provision after experiencing a partial financial hardship and 25 years of eligible payments

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Income-Based Repayment The repayment period can extend beyond 10

years regardless of the amount of the eligible debt but not beyond 25 years

Includes a loan forgiveness provision after experiencing a partial financial hardship and 25 years of eligible payments

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Income-Based Repayment Any loan amount that is cancelled may be

taxable in the calendar year it is cancelled IBR may not always be the best/lowest

repayment option for a borrower – should consider impact of eligibility for an Economic Hardship deferment

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Public Service Loan Forgiveness New loan cancellation provision for Direct Loan

borrowers not in default who: Have made 120 monthly payments on an eligible loan starting after

10/1/2007 Must have been “directly and full-time” employed in public service

during the entire repayment period FFEL borrowers may consolidate into DL to get this benefit but ALL

payments must have been in DL

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Economic Hardship Deferment POSSIBLE Change to the HRD Elimination of the debt-to-income ratio calculation for

purposes of determining eligibility as of 7/1/09 Currently borrowers are eligible for this deferment if their

total debt is more than 20% of their income and if their income minus their loan payments leaves them with no more than 220% of the income considered poverty level in the U.S.

“Big Cost” Item—ED estimated the 10-year cost of maintaining this provision at $1.1 billion

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NegReg Your Role During NegReg

Know who represents your segment or interests Follow the issues (IFAP, NASFAA)

Your Role After NegReg Review NPRM in Federal Register Respond within comment period

Send Comments toDepartment of Education (see Federal Register) w/copy to: Federal Issues Committees NASFAA

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Two members of the Senate HELP Committee are running for President Hillary Clinton Barack Obama

Student loans and broader issues of college access were issues in the 2004 Presidential election and the 2006 Mid-Terms … they are once again be on the agenda in 2008 Candidates have already outlined higher education platforms If HEA remains incomplete, it may be on candidates’ ‘to-do’ lists

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2008 Presidential Election Senator Barack Obama (D-IL)Senator Barack Obama (D-IL)

Supports increasing PellSupports increasing Pell Supports elimination of FFELPSupports elimination of FFELP Simplify FAFSASimplify FAFSA

Senator Hillary Clinton (D-NY)Senator Hillary Clinton (D-NY)

Increase Hope tax creditIncrease Hope tax credit Adjust Pell annually to take into Adjust Pell annually to take into

account increased college costsaccount increased college costs Supports elimination of FFELPSupports elimination of FFELP

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2008 Presidential Election

Senator John McCain (R-AZ)

Wants more disclosure of academic earmarks

Expand education benefits for military veterans

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Be Heard! Be Heard! YOU ARE THE EXPERT! Stay in touch (Email, phone, in person) with your

Congressional/State legislative members. Get to know their staff

Be sure they know who you are, what you do and the students you serve – be a trusted resource

Invite members of Congress/state legislature and/or their staff to tour your facilities

Respond to NPRM’s Volunteer to be on ILASFAA, MASFAA, NASFAA

committees

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Thank You!

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Any Questions/Comments?