Perkins Lives! Now What? COHEAO Annual Conference February 2, 2016

Transcription

1 Perkins Lives! Now What? COHEAO Annual Conference February 2, 2016

2 Agenda The Perkins Loan Extension Act The New Perkins MPN New Disclosure Requirements Current Efforts and What s Next? Questions, Ideas & Discussion 2

3 The Perkins Loan Extension Act of 2015

4 A Perfect Storm of Confusion The Perkins Loan Program expired 9/30/15 Grandfathering provisions went into affect on 10/1/15 Congress enacted the Federal Perkins Loan Program Extension Act of 2015 on 12/18/15 As of 1/29/16, Department has not yet issued guidance on the new provisions Current environment - award at your own risk! 4

5 A Perfect Storm of Confusion Determining Eligibility in is a bit challenging! If Perkins is awarded and disbursed prior to 10/1 - eligible borrowers can receive their fall and spring awards. If awarded and disbursed 10/1 12/17, students are eligible under the grandfathering rules. If awarded and disbursed 12/18 forward, rules from the Perkins Loan Extension Act of 2015 apply. But we haven t received guidance yet, so Now What? 5

6 The Perkins Loan Extension Act of 2015 Amends the purpose: HEA 461: authorized the Secretary to operate the Perkins Program for the purpose of stimulating and assisting in the establishment and maintenance of funds at institutions of higher education for the making of low-interest loans to students in need thereof. The Perkins Extension Act: authorizes the Secretary to assist in the maintenance of funds at institutions of higher education for the making of loans to undergraduate students in need. 6

7 The Perkins Loan Extension Act of 2015 Current and New Borrower Definitions Current Borrower: On the date of disbursement, has an outstanding balance of principal or interest of a Perkins Loan from the institution. New Borrower: No outstanding Perkins Loan balance of principal or interest from the institution. Based on Perkins Loans the borrower received from the school the borrower is currently attending. Graduate Student Limited Eligibility A school may continue to make Perkins Loans through 9/30/16 to an eligible graduate student who has received a Perkins Loan before 10/1/15, and who is enrolled in the same academic program at the same institution. Allows current graduate borrowers to complete the academic year. Graduate students who have not received a Perkins Loan from the school they are attending prior to 10/1/15 are not eligible. 7

8 The Perkins Loan Extension Act of 2015 Amends Student Eligibility Provisions: 1. Through 9/30/17: New Perkins Loans may be made to new undergraduate Perkins Loan borrowers, who on the date of disbursement of the new loan, have no outstanding balance of principal or interest from the institution. Must first award Direct Subsidized and Unsubsidized Loans to such students before awarding a new Perkins Loan. 2. Through 9/30/17: New Perkins Loans may be made to current undergraduate Perkins Loan borrowers, who on the date of disbursement of the new loan, have an outstanding balance of principal or interest on a Perkins Loan from the institution. Must first award Direct Subsidized Loans before awarding a new Perkins Loan. 8

9 The Perkins Loan Extension Act of Through 9/30/16: New Perkins Loans may be made to certain graduate borrowers who received a Perkins Loan prior to 10/1/2015 from the institution. Only the institution that has most recently made a Perkins Loan to a graduate student prior to 10/1/15 may make a new Perkins Loan to the student to attend that institution to complete his or her academic program. Eligible graduate borrowers who receive a Perkins disbursement after 6/30/16 and before 10/1/16, for the award year, may receive a subsequent disbursement on the same loan no later than 6/30/17. (Rule of Construction) 9

10 The Perkins Loan Extension Act of 2015 The Extension Act: Specifically repeals the grandfathering authorization; Prohibits institutions from making new Perkins Loans to any students after September 30, 2017; Is silent regarding whether undergraduate students who are awarded new Perkins Loans prior to September 30, 2017, for the award year will be eligible for subsequent disbursements on their Perkins Loans after September 30, i.e. Spring of 2018; Prohibits future appropriations for the program; Prohibits an automatic extension of the program under GEPA (General Education Provisions Act). Neither amends nor repeals HEA section 456(b), which provides for the reimbursement to institutions of Perkins Loan cancellations. Therefore, Congress could appropriate funds for cancellation reimbursements if it chooses to do so. 10

11 The Perkins Loan Extension Act of 2015 Under the Extension Act, Institutions will be required to return Perkins Loan fund assets in the following manner: Capital Distribution: Beginning October 1, 2017, each participating Institution will be required to return to the Secretary the federal share of its Perkins Loan funds. Distribution of Late Collections: After September 30, 2017, each Institution will be required to return to the Secretary the federal share of any borrower payments or collections in principal and interest on outstanding Perkins Loans. Distribution of Excess Capital: If prior to October 1, 2017, a participating Institution or the Secretary determines that the liquid assets in the Institution s Perkins Loan fund exceeds the amount required for Perkins Loans or other purposes, in the foreseeable future, the Institution will be required to return to the Secretary the federal share of the excess capital. Under each of these provisions, the Secretary s share to be returned is to equal an amount of the loan fund, late collections, or excess capital proportional to the amount of ED s overall FCCs, and Institutions are to retain the remaining amounts. 11

12 Perkins Master Promissory Note

13 New Perkins MPN Page 1 Expiration Date Change New Expiration Date: 9/30/2018 Must use the new MPN beginning January 1, 2016 Open notes with prior expiration date remain valid for 10 years from date of signature 13

14 New Perkins MPN Page 2 Language added 14

15 New Perkins MPN Page 3 Changed dates/wording L. Military Cancellation - Upon making a properly documented written request to the School, I am entitled to have up to 100 percent of the principal amount of this loan canceled for qualifying service performed after the enrollment period covered by the loan as: a member of the Armed Forces of the United States in an area of hostilities that qualifies for special pay under section 310 of Title 37 of the United States Code. Cancellation Rate - For each completed year of service under the Military Cancellation provision. This loan will be canceled at the following rates: 15 percent of the original principal loan amount for each of the first and second years; 20 percent of the original principal loan amount for each of the third and fourth years; and 30 percent of the original principal loan amount for the fifth year. Changed School to U.S. Department of Ed B. Total and Permanent Disability - Upon making a properly documented written request to the U.S. Department of Education, the total amount owed on this loan may be discharged if the Department determines that I am totally and permanently disabled as defined in the Act and I meet certain other requirements. 15

16 New Perkins MPN Page 4 Paperwork Reduction Notice According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless such collection displays a currently valid OMB control number. The valid OMB control number for this information collection is Public reporting burden for this collection of information is estimated to average 30 minutes per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the information collection. The obligation to respond to this collection is required to obtain or retain benefit (Higher Education Act of 1965, as amended (20 U.S.C. 1087dd)). If you have any comments or concerns regarding the status of your individual submission of this form, please contact your lender directly. 16

17 Perkins Disclosure Requirements

18 New Perkins Loan Disclosures 5 New Disclosures Dear Colleague Letter 18

19 New Perkins Disclosure Requirements Provision: Predisbursement Institutional Disclosure Requirements Prior: Disclosure of the loan principal amount, loan interest rate, and yearly and cumulative maximum amounts that may be borrowed Now: Retains previous institutional disclosure requirements and in addition requires: 1. a notice and explanation regarding the end of future availability of Perkins Loans; 2. a notice and explanation that repayment and forgiveness benefits available to Direct Loan borrowers are not available for Perkins borrowers; 3. a notice and explanation regarding a borrower s option to consolidate a Perkins Loan into a Direct Consolidation Loan and any benefit of doing so; 4. for a new undergraduate Perkins Loan borrower, a notice and explanation providing a comparison of Direct Loan program loan interest rates and informing the borrower that they have reached the maximum annual Direct Subsidized Loan and Direct Unsubsidized Stafford Loan borrowing limits for which they are eligible; and 5. For a current undergraduate Perkins borrower, a notice and explanation providing a comparison of Direct Loan program interest rates and informing the borrower that they have reached the maximum annual Direct Subsidized Loan borrowing limits for which they are eligible

20 New Perkins Disclosure Requirements 1. A notice and explanation regarding the end of future availability of Perkins Loans: The Perkins Loan program expires 9/30/17 Still in question: if borrower receives fall semester disbursement on or before 9/30/17, can schools disburse spring semester? If so, Perkins is available through AY17/18 2. A notice and explanation that repayment and forgiveness benefits available to Direct Loan borrowers are not available for Perkins borrowers: Direct Loan only repayment plans not available with Perkins Income-based Repayments and Pay-as-you-Earn, Public Service Loan Forgiveness: Direct loan only benefit 20

21 New Perkins Disclosure Requirements 3. A notice and explanation regarding a borrower s option to consolidate a Perkins Loan into a Direct Consolidation Loan and any benefit of doing so: Perkins Loans can be consolidated with Direct loans, borrower would then receive all Direct loan benefits. Income-based repayment and Pay-as-you-Earn Public Service Loan Forgiveness The disclosure requirement does not address advising borrower s they may lose Perkins benefits (cancellations) i.e. low-income teacher, nurse/med tech, law enforcement, firefighter This requirement is still part of the Perkins exit process (b)(2) 21

22 New Perkins Disclosure Requirements 4. For a new undergraduate Perkins Loan borrower, a notice and explanation providing a comparison of Direct Loan program loan interest rates and informing the borrower that they have reached the maximum annual Direct Subsidized Loan and Direct Unsubsidized Stafford Loan borrowing limits for which they are eligible; and Direct loans fixed variable rates for undergraduate are 10 yr T-note note plus 2.05% not to exceed 8.25% AR 15/16 Direct Rates are 4.29% compared to Perkins fixed 5% Direct Loan Limits vary by dependency status and year in school. See Chart 22

23 New Perkins Disclosure Requirements 5. For a current undergraduate Perkins borrower, a notice and explanation providing a comparison of Direct Loan program interest rates and informing the borrower that they have reached the maximum annual Direct Subsidized Loan borrowing limits for which they are eligible. Direct loans fixed variable rates for undergraduate are 10 yr T-note plus 2.05%, not to exceed 8.25% AR 15/16 Direct Rates are 4.29% compared to Perkins fixed 5% Direct Loan Limits vary by dependency status and year in school See Chart 23

24 Federal Direct Loan Program Loan Limits Year Dependent Student Independent Student 1 st year undergrad annual limit $5,500 No more than $3,500 of this amount may be in subsidized loans. 2 nd year undergrad annual limit 3 rd year and beyond annual limit Graduate annual limit Aggregate limits (sub & unsub) $6,500 No more than $4,500 of this amount may be in subsidized loans. $7,500 No more than $5,500 of this amount may be in subsidized loans. Not Applicable (all graduate and professional students are considered independent) $31,000 No more than $23,000 of this amount may be in subsidized loans. $9,500 No more than $3,500 of this amount may be in subsidized loans. $10,500 No more than $4,500 of this amount may be in subsidized loans. $12,500 No more than $5,500 of this amount may be in subsidized loans. $20,500 (unsubsidized only) $57,500 for undergraduates No more than $23,000 of this amount may be in subsidized loans. $138,500 for graduate or professional students No more than $65,500 of this amount may be in subsidized loans. The graduate aggregate limit includes all federal loans received for undergraduate study

25 Servicer Response Working on the Modifications 25

26 Perkins Advocacy Efforts

27 COHEAO Advocacy Efforts Thank you for all YOUR efforts! COHEAO Focus: HEA Reauthorization Senate HELP Committee Chairman Lamar Alexander (R-TN) Ranking Member Patty Murray (D-WA) House Education and Workforce Committee Chairman John Kline (R-MN) Ranking Member Bobby Scott (D-VA) COHEAO Campus Flex Proposal 27

28 COHEAO Advocacy Efforts State Calls with House Education and Senate HELP Committee Members Hill Visits Support of Upper Administration: College Presidents & Gov t Relations Share your ideas, suggestions, and get involved! Contact: Jan Hnilica (Jan.Hnilica@wheaton.edu) 28

29 COHEAO Advocacy Page Visit COHEAO.org Click on the link Join Our Perkins Advocacy Efforts Resources available statistics, sample letters, testimonials, talking points, and much more! Follow us on Twitter: Like Us on Facebook: Save Perkins Now Sign the Perkins Petition: 29

30 Questions, Ideas & Discussion

31 Contact Information Maria Livolsi President, COHEAO Director, State University of New York Student Loan Service Center Jeff (JP) Pfund COHEAO Perkins Task Force Chair Assistant Director Student Loan Servicing (UW Madison & Green Bay) Financial Aid Office, UW Madison Jan Hnilica COHEAO Legislative Chair Student Accounts Manager Wheaton College (630)