Agency Liaison Report
Mike Hawkes, Director, Policy & Communications, Educational Credit Management Corporation

The passage of S. 1932, the Deficit Reduction Omnibus Reconciliation Act of 2005, did not reauthorize the Higher Education Act as a whole, but the bill included many of the provisions that were in the House and Senate reauthorization bills. This report will focus on the changes that have a direct effect on guaranty agencies.

For loans guaranteed on or after July 1, 2006, guaranty agencies will be required to collect a 1% Federal default fee, replacing the authority to collect an insurance premium (otherwise known as a guarantee fee). This fee has to be deposited into each agency’s Federal Reserve Fund. The law authorizes guarantors to deduct this fee from the borrower’s Stafford loan proceeds or to pay it “from other non-Federal sources”—presumably in most cases from the guarantor’s Operating Fund. Additionally, the law specifically requires guaranty agencies with a Voluntary Flexible Agreement with ED to pay this fee.

Loan rehabilitation to regain eligibility for Title IV assistance will be easier for defaulted borrowers. Instead of requiring 12 consecutive on-time payments for rehabilitation under current rules, S. 1932 reduces the number of qualifying payments to 9 made within a 10-month period as long as the payments are made within 20 days of the due date.

Defaulted borrowers who are subject to wage garnishment can have 15% of their disposable pay taken to satisfy the default, up from 10%. This brings the HEA into line with the percentage that can be deducted from those who owe the Federal government for other types of debts.

A new section was added to the HEA titled “College Access Initiative.” This requires guarantors to take an active role in college access, awareness and financial literacy efforts. Many guarantors are already quite active in these areas, so to a certain degree, this merely formalizes a role guarantors have increasingly assumed over the years.

S. 1932 did not contain all of the proposals that were in the original House and Senate reauthorization bills. Additionally, the previous extension of the HEA expires after March 31, 2006. Because of these two factors, it is possible that we could have another round of legislation to reauthorize the HEA as a whole.

National Association of State Student Grant and Aid Programs (NASSGAP)

No report submitted.

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

College Access Initiative
After months of negotiations, the budget reconciliation bill has passed and is awaiting the President’s signature. While many provisions have garnered mixed reviews among the higher education community, one has enjoyed overwhelming support—the College Access Initiative. Endorsed by both the House and the Senate, the initiative charges guaranty agencies to promote access to postsecondary education by providing information on college planning, career preparation and paying for college, and coordinating outreach activities with other entities in their designated state. In addition, agencies are required to provide to the Secretary of Education a comprehensive listing of the postsecondary education opportunities programs, publications, Internet Web sites and other services available.

The National Council of Higher Education Loan Programs (NCHELP) is currently working to help members fulfill these obligations and increase postsecondary educational activities throughout the country. Many FFELP participants currently provide services outlined in the College Access Initiative, and the bill states that agencies will not be required to duplicate efforts that currently meet the conditions of the initiative. Although the initiative formalizes the role of guaranty agencies in developing outreach services and contributing to a clearinghouse of information and Web resources, it also expands the role of the FFELP community in fulfilling this goal.

NCHELP will be working with organizations at all levels to pull together a comprehensive list of the outreach and early awareness resources available. We will work with experts to analyze programs around the country to determine those that are most effective and develop models that can be replicated on a state-by-state or regional basis and that take into account the needs of specific populations served by the higher education loan community.

The models would include a general component as well as portions tailored to the unique challenges facing students in urban centers and rural areas, those in low-income districts and those coming from areas with low college attendance rates. These models would also incorporate partnerships with a variety of entities that can help to leverage funding at federal, state and institutional levels.

This coordinated effort to identify best practices for effective outreach programs and services will help to ensure that the FFELP community plays a key role in defining its expanded responsibilities under the College Access Initiative and will help agencies to develop the tools needed to build on their current programs and services.

At its September meeting, the NCHELP Board of Directors heard a presentation by the Advisory Committee on Student Financial Assistance about its commitment to improving college access and its recommendation to the House and Senate to include a provision on enhancing access programs and efforts in their Reauthorization packages. NCHELP recently met with staff of the Advisory Committee to discuss the outreach programs and services that FFELP agencies are providing. The committee was very impressed by the scope and commitment of these initiatives and encouraged NCHELP to conduct research on what is available, why it is successful and how it can be replicated throughout the country.

The ultimate goal is to improve the coordination and integration of existing programs and help states to identify gaps where more services are needed. Because there has never been a comprehensive federal initiative to identify, coordinate and expand outreach efforts, the programs are generally supported in local areas by nonprofit organizations as the need arises. In the next 10 years, secondary schools will be graduating their largest and most diverse classes, federal and state governments will continue to grapple with significant budget deficits, and more students will be in need of outreach services and support. With its passage of the College Access Initiative, Congress has acknowledged the need for a federal initiative to ensure that students throughout the country receive the services they need.

At the 2006 NCHELP Spring Convention, we will assemble some of the best minds on postsecondary access to provide a series of sessions that focus on meeting the needs of the students our members serve. NCHELP is working with its members, our FFELP colleagues and other organizations dedicated to improving access to fulfill the goals of this project. We welcome input and assistance and would ask anyone interested in learning more about the project to contact Karen Lanning (klanning@nchelp.org).

Alabama

Alabama Commission on Higher Education
Submitted by Cheryl Newton, Student Assistance Administrator

The Alabama Legislature convened the 2006 Regular Session on January 10, 2006. The Governor’s Proposed Education Budget for 2006-2007 recommends current level funding for the state’s grant aid and scholarships programs.

Kentucky Higher Education Assistance Authority, designated guarantor for Alabama

No report submitted.

Florida

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

2005-06 Appropriations
State Scholarships and Grants received an appropriation increase of 13% for the 2005-06 academic year. Both the merit and need-based programs grew with these funds. The state continues to fund twenty programs. The largest need-based program, Florida Student Assistance Grants, expects to fund over 130,000 students. The largest merit-based programs, Florida Bright Futures Scholarships, expects to fund over 140,000 students.

Web Applications
Florida continues to make the application process for financial aid a simple one by applying on line at www.FloridaStudentFinancialAid.org. Our customer friendly web homepage guides students through information about available state aid. We received over 95,000 student and teacher initial applications for the 2005-06 awards. We continue to enhance our homepage with information students and teachers utilize to stay informed of their progress and funding.

2006 Legislative Activities
The 2006 Florida Legislative Session will begin on March 7, 2006. To date, approximately 40 of the over 300 education bills that have been filed incorporate some type of financial aid issue. This year, there is emphasis on teacher programs and continued funding for our need and merit-based programs.

Florida Office of Student Financial Assistance, Federal Family Education Loan Programs
Submitted by Levis Hughes, Director of FFELP Operations

OSFA Plans to Move to TERP
OSFA has contracted with the Clearinghouse on behalf of our schools for many years and is currently working with the Clearinghouse to test TERP (Total Enrollment Reporting Process). Once successful testing is completed, we will notify our business partners of the expected implementation date for TERP.

‘OSFA on the Web’
OSFA is pleased to announce the release of ‘OSFA on the Web’, our new, web-based guarantee product. Institutions can now take advantage of OSFA's instant guarantee process by submitting loans for guarantee via the Web and receiving a decision within seconds. Additionally, schools and lenders can view historical loan data from OSFA's legacy system via ‘OSFA on the Web’.

Georgia

Georgia Student Finance Commission
Submitted by Tim Connell, President

Governor’s budget recommendations
The Georgia General Assembly convened in January, and Governor Sonny Perdue’s budget recommendations include significant improvements to several of the Georgia Student Finance Commission’s financial aid initiatives.

In the FY 2006 amended budget, the Governor is recommending $100,000 for Georgia’s HERO Scholarship program, which helps veterans attend college. HERO provides an award of $2,000 per year for National Guard members or armed forces reservists who are Georgia residents and were deployed to a combat zone.

The Governor’s recommendations reflect his continued support—and the support of the people of Georgia—for programs that increase higher educational opportunities for all Georgians.

GAcollege411 anniversary
February 14 marks the one-year anniversary of GAcollege411, Georgia’s online resource that is a one-stop shop to help students plan, apply, and pay for college. During the past year, more than 57,000 My 411 accounts have been created, and the site receives many hundreds of extended visits daily. Since the initial launch, GAcollege411 has continued to add and expand components. One of the most significant improvements in recent months is the ability to apply online to most Georgia colleges and universities. To date, students can apply to some 67 postsecondary institutions and by Spring, that number should rise to over 100. Coming up in the next year—the ability to submit high school transcripts electronically as well. Students, parents, and counselors are praising GAcollege411 which may well be Georgia’s most important higher education initiative since HOPE.

Kentucky

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

State Legislation

Non-traditional Student Grant
KHEAA’s Go Higher Grant Program Bill, HB 441, passed the House Education Committee and is being considered by the full House. The one-time, $500 grant would assist independent, nontraditional Kentucky students with paying higher education expenses. The Governor’s Biennial Budget Recommendation for FY 2008 includes $200,000 for Go Higher Grants.

Mary Jo Young Scholarship Update
KHEAA established the Mary Jo Young Scholarship in 2004 to encourage and provide funding to disadvantaged high school students to take dual credit courses through a Kentucky college and Advanced Placement (AP) courses through the Kentucky Virtual High School (KVHS). The maximum award is $550 for two courses each semester or $300 for one course each semester. An additional $85 per course may be used for instructional materials. The Kentucky Department of Education (KDE) administers the selection process, and KHEAA disburses funds on behalf of eligible students.

In FY 2005, KHEAA paid KDE $183,000 for costs related to AP courses and exams taken by 470 students through KVHS. During the first seven months of FY 2006, KHEAA disbursed $232,329 to 370 students. Sixty-two high school students took 82 dual credit courses (for a total of $14,297), and 308 KVHS students took AP classes and exams (for a total of $218,032).

Kentucky Education Savings Plan Trust (KESPT)
Through December 31, 2005, the Kentucky Education Savings Plan Trust had more than 9,000 accounts and assets totaling over $72 million.

An account may be opened for a beneficiary of any age for as little as $15 if using payroll deduction. Earnings are exempt from Kentucky taxes, and withdrawals used for approved college costs are not subject to federal taxes through at least 2010. Savings can be used at colleges across the United States.

Guarantee Volume
KHEAA guarantee volume continues to increase this fiscal year. Including consolidation loans, guarantees increased 20.4 percent during the first half of FY 2006 to over $900 million.

GoHigherKY.org
GoHigherKY, a central point of contact for all information about postsecondary education in Kentucky, received over 7.6 million hits during the first half of FY 2006. Over 11,000 accounts were opened, and 468 admission applications were submitted through the site.

GoHigherKY usage has grown tremendously since the site went live in June 2004. The number of site hits grew 58% during the second half of FY 2005 and 73% during the first half of FY 2006. The number of new accounts increased 46% during the second half of FY 2005 and 162% during the first half of FY 2006.

GEAR UP
KHEAA is working with Kentucky’s GEAR UP staff to create a job description and work plan for the KHEAA/Student Loan People College Awareness Specialists. These specialists will work with existing outreach staff to provide support to the GEAR UP Kentucky II initiative/grant. Specialists will work from four strategically located host institutions.

Health Careers Opportunity Program (HCOP)
KHEAA/Student Loan People Outreach staff are partnering with the University of Kentucky’s Health Careers Opportunity Program (HCOP). UK’s Area Health Education Center (AHEC) was recently awarded a $1 million federal grant for its HCOP to increase the number of disadvantaged and underrepresented students pursuing education for health-related careers. The grant will be administered over the next three years. Twelve rural and underserved counties in eastern Kentucky and two urban counties with large Hispanic and African-American populations will receive support.

College Goal Sunday
KASFAA held College Goal Sunday on January 29 at 19 locations across the state, including one at KHEAA. Statewide, there were over 2,400 attendees and over 200 volunteers.

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-supported program assists Mississippi schools
Six Mississippi postsecondary schools are among the 71 announced as recipients of grants to help low-income students whose studies were disrupted by major hurricanes during 2005. USA Funds is providing $2.3 million in support of the grant program, the Disaster Relief Fund for Postsecondary Education Students.

Delta State University, Millsaps College, Mississippi University for Women, Tougaloo College, the University of Mississippi and the University of Southern Mississippi are recipients of grants from the Disaster Relief Fund for Postsecondary Education Students.

Learning Communities program under way in Okalona
Okalona School District in Okalona began activities as a partner in the Learning Communities Coalition. USA Funds is a member of the coalition, which is focusing services on six pilot communities—including Okalona, Miss—in a bid to improve access to postsecondary education for low-income students.

USA Funds is contributing more than $500,000 in funding as well as staff and programmatic support to the national effort.

E-learning program targets Mississippi Delta students
USA Funds provided a grant to the Mississippi Institutions of Higher Learning to partner with Delta State University on its e-learning center project. The center, located on the DSU campus, permits school districts in the Mississippi Delta to offer selected college-preparatory subjects that the schools otherwise could not provide.

USA Funds sponsors Mississippi Next
For the second consecutive year, USA Funds provided financial support for the publication of Mississippi Next magazine. As part of its sponsorship, USA Funds is funding a $1,500 scholarship to a 2006 graduating Mississippi high school senior for use at any Mississippi postsecondary education institution.

North Carolina

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

In late November, College Foundation of North Carolina passed a milestone—1 million users have established accounts on the website! CFNC.org continues to expand the services available, most recently launching a teacher education preparation module designed to help students find information about becoming a teacher in North Carolina. In addition, online applications for scholarships and career loans are now available through the website; other enhancements will continue to be added as we continue to promote access to higher education in North Carolina.

FAFSA Day is scheduled for Saturday, February 18. The number of advance registrations exceeds last year’s numbers significantly. Forty-two sites are hosting FAFSA day, an increase over last year’s 29 sites. Public service announcements and mailings to students have generated record interest in the event. Barring weather complications, the event will be well attended! The State Education Assistance Authority is most grateful to our NCASAA colleagues who donate their time and service to this project each year.

South Carolina

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

The 2005-2006 award year began July 1, 2005, with the SC Tuition Grants Program receiving about a $150,000 net increase from the SC General Assembly. Including all state and federal funds, the SC Tuition Grants Program will award $28.5 million to approximately 12,000 eligible SC residents attending the 20 participating SC independent colleges during the 2005-2006 award year. After a 5-year conversion process, 2005-2006 is the first year that all 20 participating colleges have a $2,600 maximum grant. The 2005-2006 year is also the first year that eligible students began receiving SCTG award notifications via computer e-mail rather than through the US postal system. This has resulted in a substantial dollar savings to the SC Tuition Grants Commission and the State of South Carolina.

At the summer meeting of the SC Tuition Grants Commission this past June, the 2006-2007 State Budget request for the SC Tuition Grants Program was approved by the commission and subsequently forwarded to the SC State Budget Division for consideration. The SC General Assembly will consider agency budget requests for the 2006-2007 state fiscal year during the upcoming 2006 session of the State Legislature that begins in January, 2006. A funding increase of $11,639,581 has been requested to move all maximum grants from $2,600 to $3,100. It should be noted that if the $6 million in Lottery Funds presently being received by the SC Tuition Grants Program is renewed in 2006-2007, only a $5.6 million increase will be needed to move to a $3,100 program-wide maximum grant.

Since 2002, the State Budget has included a proviso that exempts the SC Tuition Grants Program from mandated mid-year state budget reductions. The SCTG Commission has requested that this proviso be included again in the 2006-2007 state appropriations act.

To better accommodate the students and the colleges served by the SC Tuition Grants Program, effective January 1, 2006, the office hours of the SC Tuition Grants Commission will be changed from 8:30 a.m. – 5:00 p.m. to 8:00 a.m. – 4:30 p.m.

SC Tuition Grants Commission meeting dates for 2006 have been set for the following dates: March 23, June 8, and December 7. All meetings are in the Solomon Blatt State Office Building in Columbia.

South Carolina Student Loan Corporation, designated guarantor for South Carolina
Submitted by David Roupe, Vice President of Guaranty Services

Transitions
After 31 years of dedicated service to the students and families of South Carolina, William M. “Bill” Mackie, Jr. has retired as the first and only President that SCSLC has known since its inception. Chuck Sanders has been appointed by our Board as President and CEO succeeding Mr. Mackie.

Loan Volume
As with most of the financial aid industry, SCSLC’s loan volume continues to grow. However, as the gap between need and financial aid continues to widen, we are seeing an alarming trend in the growth of private loans. Our private loan applications grew by 67% over last year, while the dollars disbursed grew by 91.5%!

Cohort Default Rate
Recently released figures from the Department of Education shows that SCSLC lead the nation with a Cohort Default Rate of 1%, while the National average was 4.9%. SCSLC has kept its cohort default rate at 1.5% or below for 5 consecutive years. We attribute our success to a strong cooperative effort between our schools, borrowers and a hard working staff of loan and customer service representatives.

Financial Aid Outreach
2006 is starting off with a bang! We have scheduled presentations to the Teacher Cadet students at 10 different high schools during January. In addition, we have 11 Financial Aid Night presentations scheduled for the month with a goal of 50 before the end of the school year. Finally, we have presented 10 Money Management seminars so far this year and hope to provide an additional 12-15 during the Spring semester.

Tennessee

Tennessee Student Assistance Corporation

No report submitted.

Virginia

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

The State Council of Higher Education for Virginia is recommending over $150 million in new funding over the next two years for programs serving undergraduate and graduate students enrolled at Virginia's participating public and private institutions. The agency is also in process of conducting an affordability study of Virginia's colleges and universities. The study is due for completion by January 11, 2006.

The Virginia General Assembly is considering recommendations to increase undergraduate need-based student financial aid at public institutions by over $10 million, non-need grants for private institution students by $4.4 million, and graduate student aid at public institutions by $5 million. The FY06 appropriations for those programs are $84 million, $45 million and $12.3 million respectively. Bills have been introduced to consider financial aid programs for community college transfer students, a state merit-based program, promotion of early graduation, and math, science, engineering & technology students, among others. Virginia is also considering proposals to provide the in-state tuition rate to military families as well as considering legislation that would affect students without lawful status. These bills, and others, can be tracked at http://leg1.state.va.us/061/lis.htm. Finally, SCHEV has completed a comparative study on higher education affordability. The report can be accessed at www.schev.edu.

Educational Credit Management Corporation (ECMC), designated guarantor for Virginia

ECMC was pleased to participate in the Commonwealth College Access Network’s first annual conference held in Charlottesville on December 12-13. CCAN’s goal is to create a network of existing college access and awareness providers in Virginia, as well as to nurture new programs in underserved areas of the Commonwealth. The conference drew over 125 registrants representing fifty-four different organizations involved in awareness and access activities.

“Opportunities”, an awareness and access publication targeting high school juniors and seniors, was in such demand this year that all supplies were exhausted in December. This booklet is jointly sponsored by ECMC, SCHEV and VASFAA and is distributed primarily through high school guidance offices and community-based organizations. ECMC and SCHEV recently partnered to produce an additional 10,000 copies to be distributed at VASFAA’s “Super Saturday” event on February 4.

In mid-2006, a new web site for the Common Manual will be launched. ECMC is pleased to have taken a lead role in the planning and development of this site that will serve the entire student aid community. The public portion of this site will be built by a commercial web-design firm, and ECMC is building the private administrative portions of the site that will be accessible to the participating guarantors only.

ECMC also actively supports the most complete reference source regarding student loans—the NCHELP e-Library (www.nchelp.org). ECMC has the lead role in ensuring that the e-Library is updated on a daily basis, making sure the latest information is available to the entire community.