What to Expect in FA for the Next Term

Now that the elections are over, what does the future hold for our sector of higher education? 

The results of the Presidential election are well-known, but what happened with the Senate and House? In the Senate, 6 Democrats, 3 Republicans, and 1 Independent retired. There were 7 Democrats and 3 Republicans elected, so that brings the total count to 53 Democrats, 45 Republicans, and 2 Independents (both of which will caucus with the Democrats). In the House, 14 Democrats retired and 11 Republicans retired. New members elected were 43 Democrats and 36 Republicans, which brings the count (as of last week) to 195 Democrats, 233 Republicans, and 7 undecided.

In the Senate Committee on Health, Education, Labor, and Pensions, Democrat Tom Harkin (who's a huge supporter of Gainful Employment and the destruction of our sector) remains the chairman of the committee. The ranking Republican member is Lamar Alexander, who's a big supporter of lessening regulations (such as Gainful Employment), so there may be some clashes in this committee in the next couple of years.

In the House Committee on Education and the Workforce, Republican John Kline remains chairman. Also on the committee is Republican Virginia Foxx. Both Kline and Foxx have voted repeatedly against anything relating to Gainful Employment, including a bill that was to de-fund the Department of Education from enforcing GE. Unfortunately, that bill died when it hit the Senate.

What's the President's agenda in education for the next four years? 1.) wants to cut the rate of tuition increases by half. This seems to be more of an issue for (believe it or not) public schools. 2.) pell grant support is going to continue. Some want to eliminate the pell or at least reduce it, but he wants to keep it at nearly all costs. 3.) continue to support community and public colleges as being the places for students to attend, so he's willing to dump more money in their systems to assist with that, as well as reward non-profit organizations for assisting in that goal.

What's the Department of Education's agenda for the next four years? 1.) Secretary Duncan wants to stay on. He does not support our sector and hasn't tried to hide his dislike of us (just like Sen. Harkin). 2.) continued pursuit of Gainful Employment. Just because they were shut down once doesn't mean they aren't going to try again. The stalling of the Department on the court ruling was to push it passed the election to see how to continue. Now that they know, they will continue it. 3.) continued enforcement actions with assistance from other agencies such as Department of Justice and Consumer Financial Protection Bureau. 3.) begin looking at the "value" of the education that the student is receiving. There is no word yet as to how that will be defined, but there will be pressure on all schools as to making sure the students receive a "valuable" education. 4.) more rules in the areas of fraud, teacher preparatory programs, academic progress, and accounting for federal funds. 

What education legislation is on the agenda? 1.) Elementary and Secondary Education Act due for reauthorization. 2.) Individuals with Disabilities Education Act due for reauthorization. 3.) Workforce Investment Act due for reauthorization. 4.) and most importantly the Higher Education Act due for reauthorization. 

What other hot topic items will we be dealing with? 1.) veterans education programs, 2.) FY 2014 pell grant shortfall, 3.) federal budget, 4.) students' levels of indebtedness, 5.) reasonable and affordable student loan payments, 6.) increased regulations and enforcement by new entities (such as the Consumer Financial Protection Bureau). 

So what should we expect? As SNL put it: "Four more years!... of gridlock!" The House is favorable to our sector, but the Senate, President, and Dep of Ed are not. The House will continue to try to assist, but will be vote down. The Senate will continue to hinder, but get vote down. The way around the Senate and House gridlock (which we've seen already, and should expect more of) are two ways: Presidential Executive Orders and Dep of Ed's regulations. Congress will continue to propose legislation, but they will be hindered by the lack of money. I've been told to expect the war between proposed legislation and the lack of funds to actually enable it, but that doesn't mean nothing will get through.

Only two more years until midterm elections! Who knows what'll change by then!

Return Pell Funds for 2012-13

Not too long ago, the Dept of Ed announced that students were able to return unnecessary portions of their Pell Grants for future use. The main reason for this is because of the Lifetime Eligibility reduction. The thought was because students can only use a certain amount of Pell in their lifetime (now 600% instead of the old 900%), they may want to return unused portions for future use. Of course, it's not as simple as it sounds.

1. They can only return funds that have been disbursed in the current award year, so nothing from previous award years. If the disbursement hasn't been made, they can decline a disbursement to be made.
2. They have to return it to the school, and then the school will refund the money.
3. The students has to submit signed statements to the school, saying that they understand that the money they are refunding (or declining) is going back to the government, and also acknowledging that the Pell Grant funds may not be available after the award year is over. They may not be available if their Pell Grant awards change. Since the Lifetime Limit is according to percentage rather than amount, if your full pell is $5550 as opposed to a full pell of $3000, a quarter disbursement would be $1850 and $1000 respectively, but they are both 33%.

The Dept of Ed has said that they won't question students who choose to do this, as long as the necessary paperwork has been submitted. This is effective for the 2012-13 award year, but there is no word as to if the 2013-14 award year will also fall under this.

We'll see how many people actually do this. If you think/know that you're going to receive a higher Pell Grant in the following year, and you don't want to burn your eligibility on a small Pell Grant, then that could be a strategy if you have something else to supplement the Pell you are declining. On the other hand, I don't know many people who will turn down grant money from the government. Just remember that it's an option.

When Returning from a Leave of Absence

The Leave of Absence (LOA) is simply a break in a student's enrollment. The FSA Handbook and CFR are vague on some aspects of the LOA, but are quite specific on other aspects. But what happens when you come back from the LOA?

Well, you should know certain things. You can't get charged while on the LOA. If you took the LOA at the beginning of your semester/quarter, then when you return you will just get charged for your next enrollment period. If you were in the middle of your semester/quarter, then when you return, interesting things can happen. You will not get charged for your next enrollment period until you complete it (since you started one but didn't complete it). Any FA that has already come in before the LOA began will not come in again until you complete the enrollment period, and any FA that hasn't come in yet can come in then. This is why if you have money coming to you, and you received it before the LOA, then there's a good chance you won't get more until you complete the enrollment period that you return for. Each situation is a little different, so you need to check with the FA office to see how it affects your situation.

The other issue is your academics. For term-based schools, you must be allowed to complete the coursework that you began before the LOA. Most people interpret this as you should be in the same classes as when you took the LOA. For nonterm-based programs and clock hour programs, you don't have to complete the same coursework you began before taking the LOA. In those programs, you aren't necessarily (depending on the school) in regular enrollment periods, so you are eligible for funds near the beginning and at the halfway point. When you hit the halfway point, then you are eligible for the next disbursement. Because of this, you take your hours or do your coursework remaining until you hit the halfway point.

The Leave of Absence is a strange and sometimes complicated situation and some schools won't do them for that reason. They are hard to explain, and they affect not only your FA, but your academics, your graduation date, and the possibility of your having to be dropped in some cases. In the end, if your school does offer LOAs, you should only consider it as a last resort, and even then make sure you understand the consequences of taking an LOA.

10 Tips to Help You Avoid Defaulting

Originally found in the October issue of the Metro Business College at Arnold's October Newsletter.

Default happens when you make no payments on your student loan for at least 270 days. By defaulting, you are violating your loan agreement and subject to several consequences including immediate payment in full of your loan.

Here are 10 tips to help you avoid defaulting:

1. Borrow for college expenses only. Borrow only the amount you need and only what you can expect to repay.

2. Understand your rights and responsibilities regarding your repayment obligation as well as your repayment options.

3. Keep all records of anything regarding your loan.

4. Notify your loan servicer if anything changes: address, phone number, your name, or if you change schools.

5. Seek help as early as possible if you have any difficulty with your student loan repayments.

6. If you have any questions, talk to your loan servicer. Things will get worse if you ignore them.

7. Keep credit card debt to a minimum or avoid credit card debt completely.

8. Create and maintain a budget.

9. Consider making nominal student loan payments while in school. This will reduce the amount you owe after graduation.

10. Make loan payments on time.

What might not seem like a lot of money right now, can make a big difference in your payment later.