Government Relations Committee
Submitted by Ron Gambill

Reauthorization
After almost ten years since the last Reauthorization, President Bush signed the “Higher Education Opportunity Act” which reauthorized the Higher Education Act of 1965, as amended, on August 14th. This was after fifteen extensions of the HEA. Numerous changes were included that will impact all phases of Title IV student financial aid and numerous reporting requirements for postsecondary institutions. The document was in excess of 1,000 pages, so there will be a significant amount of time needed to sort through all of the changes, establish new programs, procedures and regulations which will need to be negotiated.

The Department of Education has announced six public hearings to be conducted on P.L. 110-315 as they prepare for the Negotiated Rulemaking sessions. The closest hearing to Tennessee is October 6, 2008 at Johnson C. Smith University, Charlotte, NC. The hearings will be held from 9:00 a.m. to 4:00 p.m. local time. The Federal Register about the hearings was published on September 8, 2008.

Significant future changes are in store for the FAFSA and need analysis which will impact student eligibility for need-based financial aid. Numerous new disclosures will be required for loans, institutional codes of conduct, content for entrance and exit counseling and new audit standards.

There will be volumes of information to be promulgated in the coming months as there are several implementation dates listed in the HEOA. The official date of enactment is August 14, 2008, but it does retroactively cover to July 1, 2008 on some programs for continuity sake.

ECASLA
The summer has been an unbelievably busy time for implementation of the Ensuring Continued Access to Student Loans Act of 2008. Not only did the bill try to address liquidity issues for the Federal Family Education Loan Program, it made several other changes impacting students’ and parents’ eligibility for loans in FFELP and the Federal Direct Loan Program.

Approved as emergency legislation in May, it had an implementation date of July 1, 2008. Although the legislative authority was provided to allow loans going back to 2003 to be used to create liquidity for lenders, the Secretary of Education made the decision to limit the loans to those originated and disbursed after May 1, 2008. For non-bank lenders, this limitation created a liquidity problem to be able to access the warehouse facility of the Department of Education. Congressional intent was to provide the flexibility to have the program operational by July 1, 2008. Due to the structure and complexity of the program, funds could not be accessed until mid-August, which created a timing issue for postsecondary institutions. Efforts are being made to alleviate those issues for the future academic years.

Major Changes: July 1, 2008

• As mandated by H.R. 5715, ECASLA, unsubsidized Stafford and Direct loan limits for undergraduate students were increased. Dear Colleague Letter (DCL ID: GEN-08-08) provides the details.
  
  
• ECASLA requires that parent PLUS borrowers be given the option of a six-month grace period to align with Stafford loans.
  
  
• As mandated by H.R. 2669, CCRAA, interest rates are reduced for undergraduate subsidized Stafford borrowers in both the FFEL and Direct Loan programs. Rates were reduced from 6.8 percent to 6.0 percent.
  
  
• CCRAA also created a new Teacher Education Assistance for College and Higher Education (TEACH) grant program for which funds first become available on July 1, 2008. Final regulations for the TEACH grant program also take effect July 1, 2008.
  
  
• As mandated by the Higher Education Reconciliation Act, for loans disbursed on or after July 1, 2008, and before July 1, 2009, borrower origination fees are reduced to 1 percent in FFELP and reduced to 2 percent in the Direct Loan Program.
  
  
• Final regulations for HERA take effect July 1, 2008.