Federal Update

Federal Update

Greg MartinU.S. Department of Education

Tri-State Spring TrainingApril 3, 2014

DEFAULT RATES

2

Transition Period

3

4

FY 2009 Official FY 2010 Official12.5%

13.0%

13.5%

14.0%

14.5%

15.0%

13.4%

14.7%

Issue Date

Cohort Years

2011 2013

3-yr

Coh

ort D

efau

lt Ra

te

National Student Loan Default Rates

The FY 2010 Official 3-Year national rate is

14.7% Which represents an

increase of 9.7% from the FY 2009 Official

rates of 13.4%

4

FY 2011 3-year draft cohort default rates

planned to be released 2/18/14

Default Sanctions* (3-year rates) Default Prevention Plans

1st year CDR is equal to or greater than 30%: Establish a default prevention task force; and Develop and submit a default prevention plan to ED

2 consecutive CDRs equal to or greater than 30%: Revise and submit default prevention plan ED may require specific adjustments/actions

3 consecutive CDRs equal to or greater than 30%: Lose Direct Loan AND Pell Grant eligibility

FY2011 or later CDR above 40% lose DL eligibility

*ability to appeal/challenge rates

GEN-14-03 Provides a summary of:

Cohort Default Rate calculations Consequences of high default rates

NOTE: An institution’s decision to stop participating in the Direct Loan Program does NOT eliminate the possibility that it will lose eligibility to participate in the Pell Grant Program. CDRs, and possible consequences, continue until no more of the institution’s former students enter repayment on their DL or FFEL loans taken for attendance at the institution

CDR challenges, adjustments and appeals Detailed discussion and chart on participation rate index challenges and appeals

INTEREST RATES:Bipartisan Student Loan Certainty

Act of 2013

(EA – August 9, 2013)

7

Interest Rates The Administration worked with Congress to reach agreement on a plan to

reverse the interest rate increase New rate structure applies to all loans first disbursed after June 30, 2013 Annual fixed rates based on 10 Year T-Bill plus add-on Applies to loans first disbursed between July 1 and June 30 Rate applies for the life of the loan

8

Interest RatesUndergraduate Students - Sub and Unsub 3.86% (last year’s Sub - 3.4% and Unsub - 6.8%) Add-on of 2.05% with cap of 8.25%

Graduate students – Unsubsidized Loans only 5.41% (last year’s Grad Unsub - 6.8%) Add-on of 3.60% with cap of 9.5%

PLUS Loans (parent and grad/professional) 6.41% (last year’s - 7.9%) Add-on of 4.6% with cap of 10.5%

9

Sequestration

10

(GEN-13-22; GEN-13-27)

11

TEACH Grant awards reduced by 6.0 percent for FY 2013 and 7.2 percent 0.89 percent for FY 2014

Iraq-Afghanistan Service Grant awards reduced by 10.0 percent for FY 2013 and 7.2 percent for FY 2014

New reductions for either grant is for 13/14 grants where the first disbursement is made between October 1, 2013 and September 30, 2014

Sequestration

12

Direct Subsidized and Direct Unsubsidized loan fees increased from –

1.0 percent to 1.051 percent for loans first disbursed on or after July 1, 2013 and before December 1, 2013, and to –

1.072 percent for loans first disbursed on or after December 1, 2013 and before October 1, 2014

Sequestration

13

Direct PLUS loan fees (parent and grad) increased from –

4.0 percent to 4.204 percent for loans first disbursed on or after July 1, 2013 and before December 1, 2013, and to –

4.288 for loans first disbursed on or after December 1, 2013 and before October 1, 2014

Sequestration

14

150% Direct Subsidized Loan Limit

Subsidized Loan Limit

Statute: On July 6, 2012, the Moving Ahead for Progress in the 21st Century Act (MAP-21) was enacted (P.L. 112-141)

Regulations: Interim Final Regulations published on May

16, 2013 Revised Final Regulations published on

January 17, 2014

15

Subsidized Loan LimitLimit on how many years a “first-time borrower”

may receive subsidized loans Applies to first-time borrowers on or after July

1, 2013. A first-time borrower is one who -

Has no balance on any FFEL or Direct Loan on July 1, 2013, or

Has no balance on any FFEL or Direct Loan when receiving first Direct Loan (any type) on or after July 1, 2013

16

Subsidized Loan Limit

Condition - Student has received Direct Subsidized loans for a period of time that is equal to 150% of the published length of the student’s current academic program

Result - Student may not receive additional subsidized loans for enrollment in that program or in any program of equal or lesser length

17

Subsidized Loan Limit

Students maximum time to receive subsidized loans is established based on the length of the program the student is enrolled in

Remaining subsidized eligibility is calculated by subtracting from maximum eligibility for the program, the time the student has already received subsidized loans for enrollment in any program

18

Subsidized Loan Limit A student who loses eligibility for additional

subsidized loans may lose interest subsidy on previously received subsidized loans, if - Student did not complete program, and Continues in same program or, Enrolls in another undergraduate program of the

same or shorter length Effective on the date of the student’s continued or

new enrollment

19

GEN-13-13 (AY and Loan Periods)• Schools must report and update corrections to the

Direct Loan academic year and loan period dates in COD for loans first disbursed on or after 7/1/13• Summer term treated as header/trailer in a

scheduled academic year must not be included in the academic year dates unless the student will actually be receiving a Direct Loan for the summer

• Loan period and/or academic year dates may need to be adjusted based on actual student enrollment

• Provides 13 examples in standard term and nonterm program situations

20

Special Considerations Preparatory Coursework Non-credential Teacher Certification Programs Part-time enrollment

• Half-time (sub usage period multiplied by .5)• Three-quarter-time (sub usage period multiplied by .75)

Borrowing a full annual subsidized loan amount for a period shorter than a full academic year equals one full year of subsidized usage

Borrower responsibility of interest accrual impacted by completing or not completing program in timely manner

21

ED Responsibilities ED Responsibilities (NSLDS/COD/CPS)

• Calculating a 1st-time borrower’s maximum eligibility period;

• Calculating a 1st-time borrower’s subsidized usage periods;

• Determining if 1st-time borrower has eligibility & how much;

• Determining if a 1st-time borrower loses interest subsidy

22

School Responsibilities1. Must ensure that first-time borrowers begin receiving

counseling on the 150 percent limit on July 1, 2013 - May use counseling documents attached to

5/16/12 EA - As of 6/28/13, ED entrance counseling on StudentLoans.gov will be updated with new information

2. Correctly report DL Academic Years and Loan Period dates in COD per GEN-13-13

3. In 14/15 DL processing year begin providing new program and student data in COD and NSLDS (CIP codes, program length, enrollment status, credential level, preparatory coursework or non-credential teacher certificate)

23

COD Updates • Subsidized Usage Limit Applies (SULA) field in COD

• Identifies a first-time borrower • Located on the COD View Person Information page • Populated with date first actual disbursement of a DL award for first-time borrower is accepted by COD

• New COD Warning edit (Edit 200) • Web-only report automatically posted weekly to

school’s COD Reporting Newsbox in (.csv) file format• Report will list all borrowers subject to the 150% limit

• Electronic Announcement - June 20, 2013

24

Subsidized Usage Period – 2013-2014 Electronic Announcement - 8/30/13

Alternative method for COD to obtain enrollment statuses for loans made for the 2013-2014 yearNSLDS does not currently have a three-quarter time enrollment status (will add a 3/4 status in future)

All Subsidized Usage Periods for 13/14 Direct Subsidized Loans with an enrollment status of H in NSLDS for any portion of a loan period will be prorated on the basis of “half-time” enrollment even if the borrower is or was actually enrolled on a 3/4-time basis

COD calculation of Sub Usage starts March 2014

25

26

Teacher Certification in 2013-2014• Loans received only count against the Maximum Eligibility

Period for Teacher Certification Programs• School must provide ad-hoc reporting to COD Feb. 2014

• Loans subject to reporting and that are/were first disbursed prior to 3/15/14, schools must submit a Teacher Certification Program Ad-Hoc Reporting File prior to April 5, 2014 

• Loans subject to reporting and that are first disbursed on/after 3/15/14, schools must submit a Teacher Certification Program Ad-Hoc Reporting File within 15 days of making the first disbursement of the loan

• Teacher Certification Program Ad-Hoc Reporting File layout in 2014-2015 COD Technical Reference (Vol. II, Section 1, p.181)

• More information - 150% EA #4 and #10

Limited School Calc. - EA 11/12/13; 3/10/14• For 13/14 limited number of instances where school will need to

calculate Remaining Eligibility Periods prior to originating a Direct Subsidized Loan (13/14 COD not able to calculate)

• Performed by schools only in the following circumstances:• Borrower is a first-time borrower on or after July 1, 2013• Borrower received DL Sub (at any school) first disbursed on or after 7/1/13• School is considering student for another DL Sub for the borrower’s

enrollment in a program with a published length that is:• For programs measured in years, less than 1.5 years;• For programs measured in months, less than 10 months; or• For programs measured in weeks, less than 40 weeks.

• School plans on originating the new DL Sub using the 13/14 COD System • Optional Excel worksheet provided (updated 3/10/14 EA)• Not required if originating in the 14/15 COD System release

27

28

Revised Final Rule Usage Period Calculations

Rounded to nearest 10.0 percent and not to the lowest 25.0 percent

Both exceptions will now apply to borrowers who are enrolled part-time and receive the annual loan limit for a period of enrollment less than an academic year – First the annual loan limit exception will be applied and

then the part-time exception will be applied

29

Revised Final Rule Maximum Eligibility Period (MEP) Calculations

Two-year bachelor’s degree completion program considered to be 4 years long (MEP = 6 years)

Requires an associate degree or 2 years of postsecondary coursework for admission

Special admission associate degree programs considered to be four years long (MEP = 6 years)

Program requires an associate degree or at least two years of coursework for admission

Selective admissions Coursework necessary for licensure

150% DL Sub Limit Resources• 150% Direct Subsidized Loan Limitation Website

• IFAP.ed.gov (right-hand side)• http://ifap.ed.gov/150PercentDirectSubsidizedLoanLimitInfo/index.html

• Contains:• Federal Registers• DCLs and EAs• Q & As (over 50 questions)• Training materials• Additional resources and references

30

31

Verification2014-2015

2014-15 Verification

Verification Tracking Groups Summary Kept V1, V3, V4 and V5

Eliminated Group V2 – SNAP SNAP still an item under V1, V4, V5 and V6

Added Group V6 – Household Resources Income appears not sufficient to support

family size

32

V6 – Household Resources• All items indicated-Tax Filer (V1); or• All items indicated-Non-Tax Filer (V1);

AND• Other untaxed income from 2014-2015 FAFSA:

Payments to tax-deferred pension and savings Child support received Housing, food and other living allowances paid to

members of the military, clergy and others Veterans noneducation benefits Other untaxed income Money received or paid on the applicant’s behalf

33

V6 – Household Resources

• If school determines amounts provided do not appear to provide sufficient support for family members reported, the applicant (and parent/spouse) must:• Provide additional signed statement listing other resources

used to support family (may include items not required to be reported on FAFSA or other verification forms)

• Explain how financially supported during 2013 calendar year

34

Other Untaxed Income Documentation: 1. Signed statement listing – - Sources and amounts of income for tax year 20132. Copy of IRS W2s for sources of employment income received for tax year 2013 where applicable

Identity Theft – 2014-2015• Beginning with the 2013 tax year, a tax filer who is

not able to request an IRS Tax Return Transcript because of identity theft, will be able to call a special IRS toll-free number (1-800-908-4490)• Upon verification of identity, the tax filer can request the IRS provide a paper copy of an alternative document unique to identity theft issues (Tax Return Data Base View - TRDBV)

• The TRDBV is an official transcript that can be submitted to the school to meet verification requirements

35 DCL – GEN-14-05

Transcript Requests – 2014-2015• Online IRS Transcript requests

• Beginning with tax year 2013, once an online transcript request is validated, the IRS will return in real-time, a transcript in portable document format (pdf) through the new “Get Transcript Online” tool

• Tax filer can print/save/forward pdf transcript as needed• Other Transcript Requests

• Tax filers can submit requests via - IRS2GO mobile app, online “Get Transcript by Mail”, automated phone tool (1-800-908-9946), or paper Form 4506 or 4506-T

• These request methods will result in a paper transcript

36 DCL – GEN-14-05

Issue:Provide an efficient method for FAAs to report the verification results for records selected with the V4 and V5 Verification Tracking Groups

Solution:FAA Access will be updated to add Identity Verification Results functionality to allow FAAs to enter results individually or by file upload starting January 1, 2014

Electronic Announcement November 13, 2013

37

V4/V5 Tracking Results – 2014-2015

https://faaaccess.ed.gov

V4/V5 Tracking Results – 2014-2015

38

Whom to report: student for whom school received an ISIR with a Verification Tracking Group of V4 or V5 AND for whom school requested verification documentation

• Do NOT include students the school selected for verification of identity or high school completion status

When to report: on a regular basis with all reporting for 2014-2015 submitted within a short time after the end of the 2014-2015 award year

• Future Federal Register Notice will provide specific deadlines to submit all documentation for 14/15

2014-15 VerificationReferences & Resources

Federal Register Notice - June 13, 2013 DCL GEN-13-16 - June 13, 2013 DCL GEN-14-05 – March 25, 2014 14/15 FSA HDBK, AVG Section, Chapter 4 EA dated 11/8/13 – suggested text EA dated 11/13/13 – FAA Access tracking V4 & V5 Program Integrity Q & A Website (verification topic) http://www2.ed.gov/policy/highered/reg/

hearulemaking/2009/integrity-qa.html

39

Defense of Marriage Act (DOMA)

40

41

In June the Supreme Court struck down section 3 of the Defense of Marriage Act (DOMA) that provided that for purposes of federal programs, a marriage can only be between one man and one woman

See Dear Colleague Letter GEN-13-25 published on December 13, 2013

Implementation of the Supreme Court’s Defense of Marriage Act Decision

42

Any legal marriage recognized by a jurisdiction in which it was celebrated (50 states, D.C., U.S. territory, or foreign country) will be recognized for Title IV purposes regardless if same or opposite sex marriage or where couple residesApplies to students and parents of dependent studentsApplies to student attending institution located in a jurisdiction that recognizes same-sex marriage and in a jurisdiction that does not recognize same-sex marriageApplies only to marriages - not domestic partnerships, civil unions, or similar formal relationships recognized by statesRelevant to all FAFSA questions concerning marriage

Implementation of the Supreme Court’s Defense of Marriage Act Decision

43

2014-2015 FAFSA – All responses must be consistent with legal marital

status 2013-2014 FAFSA – New filers - All responses must be consistent with legal

marital status Earlier filers – If legally married when FAFSA was initially

filed may change marital status as a correction and school must approve request If married after FAFSA processed, school’s updating

martial status policy applies

Implementation of the Supreme Court’s Defense of Marriage Act Decision

44

FAFSAs&

ISIRs

2013-2014 FOTW• September 2013 Enhancement (6/25/13 EA)

• Income Earned from Work field will now be automatically updated with the IRS value for:• students who use the IRS DRT and indicate a marital status of Single, Separated, or Divorced or Widowed,

• parents of dependent applicants who indicate a marital status of Single, Divorced or Separated, or Widowed

• If marital status is Married/Remarried, Income Earned from Work is displayed in view-only and the total amount must be input for each spouse

• Changing this field will not change IRS Request Flag

45

Update NSLDS Fraud Loan FlagIssue:NSLDS receives records from the Office of Inspector General (OIG) that indicate someone has been convicted of fraudulently obtaining Federal Loans and is no longer eligible for aidSolution:Beginning January 1, 2014:• Records will receive Reject Reason 24 and SAR Comment 272• Effective for 2013-14 and 2014-15

13/14 and 14/15 ISIRs

46

2014-2015 FAFSA (GEN-13-12)• New parental data collection:

• Dependent students will be required to include FAFSA income and other information from the dependent student’s legal parents, regardless of the parents’ marital status or gender, if those parents live together• Legal parent means biological or adoptive

• New marital status response for dependent student’s parents - “Unmarried and both parents living together” • If divorced parents (biological or adoptive) of a dependent student still live together, they complete the FAFSA as "unmarried and living together" with information from both

47

2014-2015 FAFSATax Filing Status

IssueWe are unable to identify instances where the student or parent marital status conflicts with the tax filing status, resulting in the possibility that either too much income or not enough income is being reported on the FAFSA.

SolutionStudents and parents will begin reporting their tax filing status on the FAFSA. The system will compare the tax filing status with the marital status to determine where potential discrepancies exist, and message accordingly.

48

150% Subsidized Loan LimitThe following NSLDS fields will be added to the ISIR:

• These fields will be passed from NSLDS to CPS starting with 2014-2015 at the borrower level during pre-screening

• A SAR Comment will be triggered when SULA Flag is set to Y• New NSLDS Post-Screening Reason Code 25 value will be added:

Subsidized Usage Applies Flag Status Change

49

Added Value

Subsidized Usage Limit Applies Flag (SULA) Y/N

Subsidized Loan Eligibility Used (SLEU) 000v000

2014-2015 ISIR

50

Gainful Employment

Gainful Employment - Disclosures

51

Court left in place regulations that require schools to disclose certain data about each of their GE Programs Disclosure Template Released – See GE Electronic

Announcement #46 (11/22/13) Institutions must update their GE Program disclosures

with the 2012-2013 award year information no later than January 31, 2014 using the released template process

Institutions must prominently provide a direct link from the home page of the GE Program website to the program’s disclosure page that was generated by the disclosure template application

Technical questions: (855) 359-3697 or [email protected]

52

GAINFUL EMPLOYMENT - PROPOSED

Notice of Proposed Rulemaking (NPRM) Federal Register - March 25, 2014 Comments must be received by May 27, 2014 OPE Website with discussions and materials associated with GE negotiated rulemaking:http://www2.ed.gov/policy/highered/reg/hearulemaking/2012/gainfulemployment.html

53

GAINFUL EMPLOYMENT - PROPOSED

Proposed RuleTwo Eligibility Metrics

1. Debt-to-Earnings (D/E) Rate2. Program Cohort Default

Rate (pCDR)

54

GAINFUL EMPLOYMENT - PROPOSED

1. Debt-to-Earnings (D/E) Rate• Amount of debt students who completed a GE

program incurred to attend that program in comparison to those same students’ discretionary and annual earnings after completing the program• Annual D/E rate • Discretionary D/E rate

Outcomes focused on program completers Passing; Zone; Failing

55

GAINFUL EMPLOYMENT - PROPOSEDAppeals based on alternative earnings

Earnings data from an institutional surveyEarnings data from state–sponsored data systems

Mitigating circumstancesLess than 50 percent of all of the program’s completers incurred loan debt

56

GAINFUL EMPLOYMENT - PROPOSED2. Program Cohort Default Rate (pCDR)

Just like institutional CDRs but for the GE program’s former students

Evaluate the default rate of former students enrolled in a GE program, regardless of whether they completed the program

Outcomes Passing Failing

pCDR adjustments and appeals

57

GAINFUL EMPLOYMENT - PROPOSEDProgram’s loses Title IV eligibility if:

Fails both D/E measures in two out of three yearsFails or in the zone for one D/E measure for four consecutive years

Fails pCDR for three consecutive years• GE program that loses eligibility for Title IV funds or is

not passing the D/E rates measure and the pCDR measure and is discontinued by the institution, the loss of eligibility is for three calendar years

58

GAINFUL EMPLOYMENT - PROPOSED

• Require institutions with GE programs that could become ineligible in an immediately succeeding year to provide a written warning to students and prospective students of the potential loss of ineligibility and the implications.

59

GAINFUL EMPLOYMENT - PROPOSEDDisclosures – In addition to program information, includes:Loan repayment ratesCompletion ratesWithdrawal ratesPlacement ratesMedian loan debtPercent borrowingpCDRD/E rates

60

GAINFUL EMPLOYMENT - PROPOSEDReporting –

By July 31 following final rules effective date for six prior award yearsExample: If effective date is July 1, 2015,

report no later than July 31, 2015 Information for award years 2008-2009

through 2013-2014For subsequent award years, by October 1 following the end of the award year

61

Regulatory Activity

62

Recent Regulatory ActivityLoans II – Final Rule Published on November 1, 2013 Effective 7/1/14; some rules can be implemented early as of 11/1/13 Repeal of Unnecessary FFEL Regulations Updating of Direct Loan Regulations FFEL Repayment Disclosures; Forbearance; Loan

Rehabilitation; Closed School Discharge; School Enrollment Status Reporting

63

Recent Regulatory ActivityLoans II – Final Rule Minimum Loan Period for Transfer Students in Non-Term credit

and clock hour programs 34 CFR 685.301(a)(10) -

(ii) For a student who transfers into a school from another school and the prior school originated a loan for a period of enrollment that overlaps the period of enrollment at the new school, the new school may originate a loan for the remaining portion of the program or academic year. In this case the school may originate a loan for an amount that does not exceed the remaining balance of the student’s annual loan limit.

Does not matter if hours transfer in or not May early implement as of 11/1/13

64

Negotiated RulemakingInstitutional Security and Crime Reporting The “Violence Against Women Act”

(VAWA) amended the “Clery Act”Negotiations: January 13–14, 2014; February 24–25, 2014; March 31-April 1, 2014

65

Negotiated RulemakingProgram Integrity and Improvement Negotiations began February 2014 Topics:

Cash management (debit cards, etc.) State authorization for distance education and

foreign locations of domestic schools Clock-to-credit hour conversion Definition of adverse credit for PLUS loan

borrowers Repeat Coursework

66

Additional DCLs &

Announcements

Dear Colleague Letters• ANN-14-04 - State Authorization - complaint process

• Two basic requirements for an institution to be considered legally authorized by the State for Title IV funding eligibility:1. State must authorize an institution by name to operate

educational programs beyond secondary education2. State must have a process applicable to all institutions,

except tribal and Federal institutions, to review and appropriately act on complaints concerning the institution

– While a State may refer review of complaints to another entity, final authority to resolve complaints is with the State

• If an institution cannot identify a State complaint process that meets the requirements in 34 CFR 600.9, ED would not consider the institution to be legally authorized by the State

67

Dear Colleague Letters

• GEN-14-01 – Pell Payment & Disbursement Schedule• Maximum Pell for 2014-2015 - $5,730

• GEN-13-26 – Shopping Sheet• Updates, HTML specifications, and the Institutional Metric Data file for the 2014-2015 Financial Aid Shopping Sheet

• ANN-13-21 – FSA COACH• Introductory Web-based tutorial updated for 2013-2014

68

Electronic Announcements

69

• 3/18/14 – Application Process for FSA1. FAFSA is only form student required to complete to be

considered for student assistance for any Title IV aid, except data needed to ensure student eligibility (i.e. verification, etc.)

• Can require additional forms for non-TIV aid programs2. Student cannot be charged any fee for completing a FAFSA

or for any other activity/process related to determining the student’s eligibility for TIV aid 

• Offering a tuition discount to students who pay early is not permitted because, in general, Title IV recipients may not be able to meet that requirement and would then be assessed higher tuition amounts

Electronic Announcements

70

• 3/18/14 – Application Process for FSA3. Institutions and other entities or individuals

may not ask or allow students to provide their PIN to any other person or entity, including institutional staff

• Nor may a student authorize another person to apply for an FSA PIN on the student’s behalf

Electronic Announcements

71

• 11/27/14; 1/7/14; 3/21/14 - New Direct Consolidation Loan Process Information

• 2/26/14 – Direct Loan Refunds• Beginning January 1, 2015, ED will no longer accept Direct Loan refunds of cash sent manually via paper check

• Refunds of cash will be electronically sent back via the G5 Web site

• 1/30/14 – Program Integrity Website Q & A Updates• Addition of High School Diploma category

72

Electronic Announcements

• 1/27/14 – Net Price Calculator• ED’s NPC Template updated for 2012-2013 award

year• 11/15/13 - Reach FSA = 1-855-FSA-4-FAA

• Simplified access to several FSA School Contact Centers through one phone number

• 10/23/13 – Verification Documents for 2013-2014 • Alternative verification documents when tax return

transcript is unavailable

Training FeedbackTo ensure quality training we ask all participants to please fill out an online session evaluation

• http://s.zoomerang.com/s/GregoryMatrin • Evaluation form is specific to Greg Martin

• This feedback tool will provide a means to educate and inform areas for improvement and support an effective process for “listening” to our customers

• Additional concerns about training can be directed to [email protected]

73