University Business - June 2010 - (Page 28)
financial aid
this program very difficult and aid administrators will likely be manually reviewing students’ information on a case by case basis to determine eligibility and the appropriate award for each student. Switching to Direct LoanS The elimination of FFELP mandated by the Health Care and Education Reconciliation Act has many institutions working overtime to convert to the Direct Loan program by July 1. Fortunately, the transition process has gone relatively smoothly so far. The legislation provided the U.S. Department of Education with $50 million to help colleges make the transition, which was made available to schools beginning in May. While the DOE is not going to provide institutions directly with funding, it has expanded its existing efforts to assist schools. In addition, it has tapped an existing contractor to help institutions during the transition period with technical and/or consulting support. The contractor has developed a pool of resources that can be deployed quickly to provide support to the institution. This includes retired and current financial aid and other campus administrators with experience in the Direct Loan Program (including recent transition experience) and other financial aid experts. The transition presents different challenges for different institutions. A NASFAA survey found that two-year colleges experienced the most difficulty switching to Direct Loans because they have the fewest resources to take on additional tasks. Despite those aforementioned reports that the transition is going smoothly, financial aid offices will continue to be concerned until the transition is completed, and they will be working furiously to get there. conSumer Loan DiScLoSureS The elimination of FFELP will end the challenges financial aid offices faced when recommending a federal student
loan provider through preferred lender lists, but DOE disclosures still apply to private student loan lists, and new Truth in Lending Act (TILA) regulations require institutions to provide several new disclosures to students if they help borrowers select a private loan provider. Financial aid officials also have to develop and submit annual reports to the federal government that explain why the institution is recommending certain lenders over others. The monitoring of campus staff—far outside the financial aid office—is an additional must, for ensuring compliance with a required institutional code of conduct.
The continuous alterations to higher ed regulations create a huge administrative burden.
The onerous new regulations give financial aid offices two undesirable options: • Continue to help students decipher the complex world of private loans and loan providers and risk running afoul of new regulations and possibly losing eligibility to participate in the federal aid program. • Cease making any recommendations and leave students to select the best loan on their own. upcoming chaLLengeS In addition to the immediate challenges financial aid offices face, the coming years will provide additional administrative burdens. The Higher Education Opportunity Act (HEOA), which reauthorizes the Higher Education Act, includes a requirement for undergraduate institutions to develop a net price calculator on their websites by 2011. The calculator will enable current and prospective students, families, and consumers to determine an estimate of a current or prospective stu-
dent’s individual net price at a particular institution. The DOE has developed a calculator template that institutions can use. But many institutions will likely choose to customize that template or develop their own calculator to provide students with the most accurate estimate. Institutions also face tougher default rate requirements in 2014 that will make it tougher on those colleges to remain eligible to receive federal student aid funds. Currently, the DOE tracks how many student loan borrowers default within the first two years of repayment to determine the official Cohort Default Rate (CDR). A provision in HEOA alters the CDR formula by adding an additional year. Beginning in late 2014, the DOE will use the percentage of borrowers that default within the first three years of repayment to determine the CDR and will impose penalties on institutions that have official three-year CDRs above a certain level. To remain eligible, financial aid offices will likely have to increase their default prevention efforts. This will create additional burdens for these overextended offices. The DOE is also finalizing a host of new regulations in an effort to maintain program integrity at higher ed institutions. Complying with these regulations will add another layer of administrative burden on financial aid and other campus offices. unintenDeD negative conSequenceS It is tough to criticize the recent actions by Congress and the DOE because they are working hard to increase financial aid for students and improve higher education, but their recent actions could have some unintended negative consequences. For financial aid offices and institutions, the continuous alterations to higher ed regulations create a huge administrative burden that eats up resources and can ultimately drive up the cost of college for students.
28 | June 2010
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Table of Contents for the Digital Edition of University Business - June 2010
University Business - June 2010
Contents
Editor's Note
College Index
Company Index
Advisory Board
Behind the News
Sense of Place
Financial Aid
Internet Technology
2010 Higher Education Guide to Audio/Visual Services
Green 2010
Viewpoint
The Quest for Internationals
What's New
End Note
University Business - June 2010
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