Region 1 Regional Notes/Report

Notes/Report: DATE: May 15, 2008 - Information from Power Presention on HR5715 What is H.R. 5715? President Bush signed into law H.R. 5715 - Ensuring Continued Access to Student Loans Act of 2008, on May 8, 2008. This new legislation increases annual and aggregate Stafford loan limits Provides for additional provisions/benefits for Parent PLUS loans Provides for Lender of Last Resort (LLR) Also gives the U.S. Department of Education the temporary authority to purchase loans from eligible lenders.  Annual Loan Limits For loans first disbursed on or after July 1, 2008: Increases by $2,000 the annual unsubsidized Stafford base limit for dependent undergraduate students; Increases by $2,000 the annual additional unsubsidized loan limits for independent undergraduate and dependent undergraduate students whose parent has been denied a PLUS loan. Aggregate Loan Limits For loans first disbursed on or after July 1, 2008: Increases the aggregate unsubsidized loan limit for undergraduate dependent students from $23,000 to $31,000 (of which, no more than $23,000 can be subsidized). Increases the aggregate unsubsidized loan limit for undergraduate independent students from $46,000 to $57,500 (of which, no more than $23,000 can be subsidized). Federal Parent PLUS Loan As of July 1, 2008, borrowers may be able to postpone payments on their PLUS loan until six months after the date their child ceases to be enrolled at least half time. Lenders may consider approving PLUS loans even if, during the period from January 1, 2007 through December 31, 2009, the parents are or were: no more than 180 days delinquent on a primary mortgage or medical bill payments or, no more than 89 days delinquent on any other debt. Lender of Last Resort (LLR) The Department will be able to designate an entire institution as eligible for LLR loans. This provision became effective on the date of enactment of the law and expires on June 30, 2009. The state designated Guaranty Agency would be required to make loans to all of an institution’s eligible students and parents under the LLR program. DOE Authority to Purchase Loans The Department is authorized to purchase from lenders FFEL loans that were disbursed on or after October 1, 2003 and before July 1, 2009. Funds received from these purchases are to be used for continued participation by the lender in the Federal Student Loan program. DOE has discretion over how much to pay for loans.  No decision yet on how much will be paid.  This part of HR 51715 is expected to increase government spending by $655M through 2009 when this part of the law expires.* Average Cost of Attendance Average COA at 4-year private school $32,300 x 4 years = $129,200 Average COA at 4-year public school $13,600 x 4 years = $54,400 (in-state) Average COA at 4-year public school $24,000 x 4 years = $96,000 (out-of-state) Federal Loan Limit Comparison Freshman Then - $3,500 + $4,000 = $7,500 Now - $3,500 + $6,000 = $9,500 Sophomore Then - $4,500 + $4,000 = $8,500 Now - $4,500 + $6,000 = $10,500 Junior/Senior: Then - $5,500 + $5,000 = $10,500 Now - $5,500 + $7,000 = $12,500 Independent Aggregate Limits Then - $46,000 Now - $57,500 Federal Loan Limit Comparison Freshman Then - $3,500 + $4,000 = $7,500 Now - $3,500 + $6,000 = $9,500 Sophomore Then - $4,500 + $4,000 = $8,500 Now - $4,500 + $6,000 = $10,500 Junior/Senior: Then - $5,500 + $5,000 = $10,500 Now - $5,500 + $7,000 = $12,500 Independent Aggregate Limits Then - $23,000 Now - $31,000 Federal Loan Limit Comparison Freshman Then - $3,500 Now - $3,500 + $2,000 = $5,500 Sophomore Then - $4,500 Now - $4,500 + $2,000 = $6,500 Junior/Senior: Then - $5,500 Now - $5,500 + $2,000 = $7,500 Dependent Aggregate Limits Then - $23,000 Now - $31,000 The Funding Gap: 4-years Gap at 4-year private school Then - $129,200 - $46,000 = $83,200 Now - $129,200 - $57,500 = $71,700 Gap at 4-year public school (in-state) Then - $54,400 - $46,000 = $8,400 Now - $54,400 - $57,500 = -$3,100 Gap at 4-year public school (out-of-state) Then - $96,000 - $46,000 = $50,000 Now - $96,000 - $57,500 = $38,500 The Funding Gap: 4-years Gap at 4-year private school Then - $129,200 - $23,000 = $106,200 Now - $129,200 - $31,000 = $98,200 Gap at 4-year public school (in-state) Then - $54,400 - $23,000 = $31,400 Now - $54,400 - $31,000 = $23,400 Gap at 4-year public school (out-of-state) Then - $96,000 - $23,000 = $73,000 Now - $96,000 - $31,000 = $65,000 POSTED BY: Kevin Ryan