Agency Liaison Report
Mike Hawkes

July 22, 2005

Reauthorization is far from being a certainty in 2005, yet the prospects are probably better now than earlier in the year. The House Committee on Education and the Workforce’s Subcommittee on 21st Century Competitiveness has marked up H.R. 609, with the full Committee mark up the next step.

The Senate is expected to craft its own version of a reauthorization bill. At this point, a comprehensive Senate reauthorization bill has not been introduced.

National Association of State Student Grant and Aid Programs (NASSGAP)
Submitted by: Theresa Antworth, NASSGAP President

NASSGAP is dedicated to the promotion of high standards in the administration and operations of state student grant and aid programs. As an association of states and U.S. territories, we stand united to promote postsecondary educational opportunities. Our biannual conferences focus on issues and trends in student financial aid, with relevant issues this past June on the annual federal budget, the reauthorization of the Higher Education Act, the simplification of the federal financial aid delivery system, and the design of the FAFSA application.

NASSGAP's annual survey report is the most comprehensive look at state-sponsored aid of all kinds: grants, scholarships, loan forgiveness, tuition waivers, etc. The most recent report (2003-04 academic year) showed that states provided 7.3 billion dollars of aid, an increase of 7 percent from 2002-03. Of the $6.2 billion in grant aid, 74 percent was need-based, up slightly from the previous year.

NASSGAP continues to work with the Advisory Committee on Student Financial Aid and the U.S. Department of Education on issues of simplification and ways to close the gap for need-based students. Because we have recently established a Washington DC office, we have been able to work closely with other higher education associations and with the Congress, in particular, Senators Jack Reed (D-RI) and Mike Enzi (R-WY), and Congressmen Ralph Regula (R-OH) and Rahm Emanuel (D-IL), to ensure that the federal government continues its commitment to the partnership with the states in providing access to higher education for low-income students.

National Council of Higher Education Loan Programs (NCHELP)
Submitted by: Brett E. Lief, President

The National Council of Higher Education Loan Programs (NCHELP) represents a nationwide network of guaranty agencies, secondary markets, loan servicers, collectors, schools and others involved in the administration of the Federal Family Education Loan Program (FFELP).

Just down the street, the U.S. House Education and the Workforce Committee is currently marking up its major Reauthorization bill, the College Access & Opportunity Act (H.R. 609). The reauthorization process is a lengthy one and few could have predicted the changes we would face as a nation since the whole thing began a few years back. The nation has changed forever through the tragic events of September 11, 2001, the wars on terrorism and in Iraq, a recession, and federal budget deficits.

What hasn’t changed over this period is the increasing desire of the American public to pursue postsecondary education and training. Not just for their personal benefit, but also for the “public good.” And that is where financial aid administrators and the Federal Family Education Loan Program (FFELP) community comes in – by providing the financial and administrative support to make these educational dreams a reality. Over this period, annual borrowing levels under the FFELP increased from $22.5 billion to $39.3 billion, with more than five million borrowers receiving support.

Lenders have provided unprecedented borrower benefits under the FFELP and established creative non-federal loan programs to meet the needs of students who were not eligible for federal loans, required funds in excess of federal loan levels or were pursuing academic programs targeted to meet national or local shortages.

As student debt levels substantially increased, default rates reached all time lows. While borrowers took their repayment obligations seriously, the counseling provided by financial aid administrators, guarantors, lenders and collection agencies in large part led to a record-low 5.2% percent default rate for FY2002, the last year published, and a decline from 6.9% four years earlier.

Over the next few years, the nation is expected to have its largest secondary school graduating classes and in the collegiate sector, enrollments are expected to reach record numbers between 2009 and 2011. The pressure on federal and state budgets will assist in increasing tuition and fees and limit the availability of grants and scholarships – therefore creating a greater dependence on student loans.

While the demand for student loans will grow, the programs under the Higher Education Act have become more political. Not only has the advocacy gone beyond students and families into school and student loan groups but politics has entered the fray. The focus of these efforts has been for all groups to portray themselves as sole the advocates of students – when in fact we all represent students. The discussions about federal student aid policy have somewhat been replaced with two other words that begin with the same first letter – politics and posturing. This vying for attention has created a condition that plays into larger political circles and could partly be responsible for the HEA not being reauthorized during the traditional timeframe – thus resulting in two extensions.

In the time lost, the economic climate has worsened and the promise last year of a $5 billion contingency for Reauthorization has turned into a budget reconciliation instruction of between $12-13 billion for the programs under the jurisdiction of our House and Senate authorizing committees.

One of the challenges in this process has been to act bipartisan in a partisan world and to ensure that we have a seat at every table where student aid is being discussed while at the same time continuing to foster cooperation between the associations that represent students, schools and the higher education loan community. We must change an age-old saying of “agree to disagree” with “agree to agree.”

It appears there will be more challenges than opportunities as this lengthy reauthorization process continues. NCHELP is committed to acting as honest brokers and working alongside our financial aid colleagues on behalf of the millions of students out there ready to enroll.

Alabama

No reports received.

Florida

Florida Office of Student Financial Assistance, State Scholarship and Grant Programs
Submitted by: Theresa Antworth, Director of Scholarship and Grant Programs

Florida Office of Student Financial Assistance, Federal Family Education Loan Programs
Submitted by: Reitha Scott, Policy Manager

“Navigating Your Financial Future” is a comprehensive program for default prevention and debt management offered by the Florida Department of Education, Office of Student Financial Assistance. The program is designed to educate and equip borrowers with the information and resources necessary to prevent student loan defaults and reduce delinquency. OSFA is committed to making every effort to ensure student borrowers have the skills, knowledge and information to make informed decisions on how to honor their student loan obligations and successfully manage their debt. Please visit our website at www.navigatingyourfinancialfuture.org for more information.

OSFA is pleased to announce the completion and roll-out of a new web-enabled front end. Institutions can now submit loan applications online via the Web and receive a guarantee decision in a matter of seconds in real-time. Additionally, schools now have web-based access to view detailed borrower information. All information can be accessed via the user's web browser with no software to download or install.

Georgia

No report received.

Kentucky

Kentucky Higher Education Assistance Authority
Submitted by: Crystal Dempsey-Gillum, Information Officer

Student Aid

Disbursements
In FY 2005, the Kentucky Higher Education Assistance Authority (KHEAA) disbursed over $164 million to nearly 121,000 students.

Kentucky’s Affordable Prepaid Tuition (KAPT)
KAPT disbursed $623,000 on behalf of 124 beneficiaries during FY 2005 (the program’s first full year of benefits usage).

Kentucky Education Savings Plan Trust (KESPT)
In FY 2005, KESPT demonstrated solid account growth with 1,363 new accounts opened. This represents a slight increase over FY 2004. The program fund balance grew to $65.3 million, representing a $13 million increase over FY 2004. Qualified disbursements totaled $1.2 million, a $200,000 increase over FY 2004.

Kentucky Lottery Proceeds
For the first time, 100 percent of net proceeds from the Kentucky Lottery Corporation this fiscal year will go directly to college grant and scholarship programs, excluding $3 million for adult and child literacy programs.

Loan Services

Guarantee Volume
KHEAA guarantee volume, including consolidation loans, increased 25.5 percent in FY 2005 to $1.2 billion. When consolidations are excluded, the increase is 25.8 percent or $1.0 billion. This is the first time in KHEAA’s history that the agency has reached $1 billion in guarantees.

Outreach

GoHigherKY.org
GoHigherKY.org, a central point of contact for all information about postsecondary education in Kentucky, has received almost 8 million hits, and nearly 8,000 students have created accounts since being brought online in June 2004. Students will soon be able to apply online for admission to the school of their choice.

Additional components of GHK in development include the transcript exchange process to electronically send transcripts along with admissions applications and the Individual Learning Plan to track academic progress throughout high school.

2004 Outreach Report
KHEAA’s Outreach Report for FY2004 has been published and is available at www.kheaa.com/serv_reports.html.

Mississippi

USA Funds, designated guarantor for Mississippi
Submitted by: Louanne Langston, Account Executive, USA Funds Services & Vicky Keller, Customer-relations Manager, USA Funds

USA Funds grant aids GEAR UP Mississippi
A $50,000 grant from USA Funds? is helping GEAR UP Mississippi in its work to promote preparation for, pursuit of and access to higher education for middle- and high-school students in the state. Additionally, USA Funds is funding $22,400 in future college scholarships through GEAR UP Mississippi’s Reach Higher program.

GEAR UP Mississippi targets a group of students attending schools throughout the state with high populations of low-income pupils. The program operates as part of the Mississippi Institutions of Higher Learning in collaboration with the Mississippi Department of Education, State Board for Community and Junior Colleges, and community partners.

Mississippi high-school students named USA Funds Scholars
Ten graduating seniors from Mississippi received scholarships totaling $15,000 through the USA Funds Scholars program. Each of the USA Funds Scholars received $1,500 one-time scholarships for postsecondary studies.

USA Funds awards the scholarships to seniors from high schools in Mississippi and the other seven states where USA Funds is the designated guarantor of federal education loans, and in the communities in which USA Funds has offices.

The USA Funds Scholars program complements USA Funds’ multimillion-dollar scholarship program. USA Funds will announce the recipients of the 2005-2006 USA Funds Access to Education Scholarships? later this summer.

North Carolina

North Carolina State Education Assistance Authority
Submitted by: Elizabeth McDuffie, Director, Grants, Training and Outreach

The NC State Education Assistance Authority via College Foundation administered grants in excess of $60,000,000 for 92,672 students during the 2004-05 academic year, a 30% increase in funding over the prior academic year. A more comprehensive report will follow in November after the final numbers are finalized.

College Foundation of North Carolina (www.CFNC.org) continues to attract high numbers of students using the services provided. Over 860,000 user accounts have been established to date and year end figures indicate that the 2004-05 year is set new records for new accounts and students using the online application feature. Currently, 115 colleges and universities accept the electronic admissions application from CFNC.

The NC General Assembly is still in session and has extended a the initial continuing budget resolution until the first week of August as the two chambers work to find a compromise budget that both the House and Senate can agree upon. The Senate version of the budget contains a lottery to fund K-12 activities which was not included in the House version. The House of Representatives, however, passed a lottery bill which would be used in part to fund scholarships for needy students. The differences in the lottery are one of the issues that must be resolved before a budget can be passed.
Finally, during the 2004-05 academic year, 812 school counselors and financial aid administrators attended training sessions conducted by NCSEAA on availability and administration of state financial aid programs for students.

South Carolina

South Carolina Tuition Grants Commission
Submitted by: Edward M. Shannon, Executive Director

The SC Tuition Grants Commission submitted its 2005-2006 state budget request last fall requesting an increase of $10.9 million to bring the award amount of all eligible applicants to a program-wide maximum grant of $3,100. A minimum increase of $1.5 million was requested to fund year #6 of the conversion to a program-wide maximum grant of $2,200 at all 20 participating colleges. A request was also made to renew the $4 million Lottery funds received by the SC Tuition Grants Program in 2004-2005 and to include again in 2005-2006 the proviso that exempts the SC Tuition Grants Program from mid-year budget reductions.

The Governor’s recommendation for funding of the SC Tuition Grants Program in 2005-2006
level-funded the base funding of the SC Tuition Grants Program at $19.3 million, made a small reduction to the Administration budget ($2,008), and recommended $4 million Lottery Funds to the SC Tuition Grants Program. Both the House and the Senate made budget recommendations similar to that of the Governor.

In 2004-2005, the SC Tuition Grants Program received 18.3% of the funds going to the SC Commission on Higher Education (CHE) Need-based Grants Program through two sources:

In the final 2005-2006 State Budget, the Lottery Funds going to the CHE Need-based Grants Program were increased by $807,666. As a result of this increase in Lottery Funds, the SC Tuition Grants Program will net an increase of $147,803 to the SC Tuition Grants Program through the 18.3% calculation.

In summary, the total funding increase to the SC Tuition Grants Program for the 2005-2006 fiscal year is $147,803. The proviso exempting the SC Tuition Grants Program from mid-year reductions is also included.

Although State Lottery Funds by law must be re-allocated each year by the SC General Assembly, the SCTG Commission decided in January, 2005, to commit the $4 million lottery funds to eligible students up front in 2005-2006 thereby allowing the maximum grant at all 20 colleges to be increased to $2,600.

South Carolina Student Loan Corporation, designated guarantor for South Carolina
Submitted by: Chuck Sanders, Executive Vice President

The South Carolina Student Loan Corporation is continuing its efforts to make higher education accessible and affordable to all. The following are some of the activities that we are involved with and which might be of interest to the Board.

Tennessee

No report received.

Virginia

State Council of Higher Education for Virginia (SCHEV)
Submitted by: Lee Andes, Assistant Director for Financial Aid

Virginia financial aid has received further increases to student need-based aid. The increases are roughly helping needy students keep up with rising education costs but the real issue involves the newest efforts at restructuring with increased institutional autonomy. With increased autonomy comes the increased ability to raise tuition/fees at higher rates but the institutions have also been charged with making sure that they do not leave behind low and middle-income students. In their six-year plans, the institutions must provide a plan for maintaining access, including increases in student financial aid. The potential for higher costs has also created interest in the completion of an affordability study in Virginia. Representatives from state, institutions, and private organizations have begun discussions to create an Access Network in Virginia to increase and improve access services in Virginia.

Educational Credit Management Corporation (ECMC), designated guarantor for Virginia
Submitted by: Mike Hawkes, Director, Policy & Communications

Again in 2005, ECMC has partnered with SCHEV and VASFAA to produce “Opportunities – Virginia Guide to Education After High School.” This 48-page booklet highlights all of the financial aid programs funded by the Commonwealth of Virginia. It explains what types of financial aid are available and the eligibility requirements for federal and state programs. It also includes information about applying for financial aid and provides a timeline for what students and families should be doing to successfully navigate the financial aid process.

ECMC is also actively involved in the creation of the Commonwealth College Access Network. This organization, currently in organization, will provide support for existing college access programs and nurture new programs in underserved areas of Virginia.

The ECMC Foundation recently awarded grants to the first ECMC Scholars. Ninety-nine of the 100 Virginia high school students chosen in 2003 for the ECMC Scholars Program have graduated as ECMC Scholars. This honor represents dedication and hard work on the part of each student in their pursuit of higher education and includes a scholarship award of $4,000 to be used for their first year at a college or university. Each ECMC Scholar is eligible for an additional $2,000 by attending a second year of higher education in fall 2006. Allowable uses for this scholarship are the same as for Pell Grants.

Two years ago, ECMC Foundation partnered with the Virginia Department of Education to select 10 schools from throughout the Commonwealth of Virginia, according to financial, need-based criteria. Each high school formed its own ECMC Scholars Program committee, which included guidance counselors, teachers, and other high school educators. These committees chose the students they felt would most benefit from additional mentoring and involvement in a special scholarship program and whose past grades and test scores may not have indicated their true potential.

Fully funded for three years, ECMC Scholars Program is envisioned as a five-year program, providing up to $3 million in scholarships to Virginia students, contingent on future funding availability. ECMC Scholars will attend schools in several states including Virginia, North Carolina, Tennessee and Florida.