Just got back last night from the Federal Student Aid Conference in New Orleans. What a place! I wasn't fortunate to visit New Orleans before Katrina, but I can tell you it's still alive and well, and fun. I happened to be there over Halloween (what residents call mini-Mardi Gras) and it was a great experience! The residents are extremely friendly and are thrilled to have the tourists.
It was an interesting conference. I'll begin by saying that attendance was at least 1,000 from all over the country, but I never did hear of an exact count. The conference was presented by the Department of Education, and many high-ranking staff members were presenters. A number of financial aid professionals blasted the Department with their frustrations about financial aid not helping middle-income families. Unfortunately, the Department was correct in their response that their hands are tied, as financial aid regulations are mandated by Congress and not the Department. What the Department of Education could verify is that although President Bush supports "middle class angst", Congress is aimed to help the neediest families (low-income) first, then the middle class. The recurring theme for the conference was "affordability and accessibility".
There is a number of new legislation, although implementation won't be until 2008-09 or 2009-10. Here is a highlight, as more information will be forthcoming as rules are defined:
- Beginning 2008-09, familes completing the FAFSA for the first time will be able to get a real-time PIN number. What this means is if you are filing the FAFSA for the first time, you (and your parent, if needed) can be assigned your PIN number prior to filing the FAFSA if you so choose. You'll remember in a previous blog I said that student's are assigned PIN after filing the FAFSA, and parents had to request a PIN. Beginning next year, PIN numbers will be assigned at the beginning of the FAFSA application if the student/parent selects that option. By choosing this option you can speed up the FAFSA process tremendously.
- Many private lenders are inappropriately marketing their loan products by not disclosing (or disclosing in very fine print) their fees, interest, and repayment plans. The Department of Education's Office of Ombudsman has created a task force to look into marketing practices.
- Congress is mandating a PLUS Auction Pilot which means an auction will be performed every two years to award contracts to two PLUS lenders for each state. What this means for students is that once the pilot is enacted, families borrowing PLUS loans for the first time will have only two lenders to choose from at each state. Right now, parents can choose any lender. There are many questions about this "pilot", which will be mandatory for all states, so more information will be forthcoming. However, I see this as a step backwards in offering families options, and financial aid professionals will definitely hear from families abou their limited options!
- A new TEACH grant (teaching) will be implemented. I will report more on this later. It may not be as good as it seems.
- Good things for 2009-10. They must have read my mind from a previous blog I wrote about my biggest criticisms, because Congress has loosened their stronghold on the Federal Methodology calculation. These should help everyone:
- The Income Protection Allowance will be higher, meaning more income will be protected from being used as a Family Contribution
- The Auto-EFC, which means income at a certain level when filing a 1040A or 1040EZ, will increase from an AGI of $20,000 to $30,000 and some may qualify even if a 1040 was filed.
- What will no longer be required to report on the FAFSA:
- Welfare benefits
- Earned Income Credit
- Special Fuel Tax Credit
- Untaxed Social Security Benefits
- Untaxed Foreign Income
- Special Combat Pay
- Again for 2009-10, a savings 529 plan in the student's name will no longer be a student asset. Instead, it will be reported as a parent asset. Parent assets are more protected than the student's.
- Another 2009-10 plan: students who are legally emancipated will be able to file the FAFSA as independent. This raises alot of questions as to what determines emancipation. The Department of Education has concerns as to how easy it will be to get this status, especially when states differ in their definition. Nothing is finalized as of this point, so don't run out and get emancipated just yet.
I will mention again that none of these items I have listed are available now. It is important to know that Congress and the Department of Education is currently going through what's called Notice of Proposed Rulemaking metholodogy (NPRM). MPRM entails government officials working together to come up with rules for these programs. There is a comment period in which financial aid professionals can submit their opinions/views about these changes. I did learn a little about how Congress works, so that may be in another blog.
These are just a few "biggies" from my personal notes. I'm sure I'll be reporting more about each item as I delve through all of my handouts and notes.