Federal Updates

Economic stimulus bill finalized

Last week, Congress reached agreement on a final version of H.R.1, the new economic stimulus bill (see Shoptalk Online editions 489 and 487 for the history of the bill). President Obama is expected to sign the bill this week.

The compromise bill crafted by the Congressional conference committee represents a fusion of the original House and Senate bills; as such, it retains some federal student aid provisions but not others. For example, it authorizes increases in the annual Pell grant award amount, as well as increased Federal Work-Study allocations. It also provides for simplification and expansion of the current education tax credits. However, the final bill does not appear to contain the following, previously-proposed items: increases in unsubsidized Stafford loan limits, additional Perkins loan capital contributions, and funding for higher education facilities.

More information
To access the text of H.R.1, go to THOMAS, the U.S. Congress Web site, at http://thomas.loc.gov. In the space for "Search Bill Summary & Status," enter "H.R.1," select "Bill Number," and then click on "Search." Shoptalk Online will keep readers informed of any further developments.

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Questions about Income-Based Repayment? Don't miss this important webinar!

Many members of the financial aid community have heard by now that a new repayment option, Income-Based Repayment (IBR), will be available to both current and new FFELP and Direct Loan borrowers as of July 1, 2009. But are you unsure how IBR works or what the associated terminology means? Join industry experts for an IBR webinar series offered by the National Council of Higher Education Loan Programs (NCHELP) to get ready for this important new repayment option for borrowers. The first of several IBR webinars will be held on February 20, 2009, from noon to 2 p.m., CST.

Why lenders and servicers should attend
IBR can be a powerful tool in your delinquency and default prevention programs, improving your organization's effectiveness in assisting borrowers to successfully repay their loans. In today's economic environment, it's more crucial than ever to ensure that borrowers are aware of this repayment option and can smoothly transition into it should they choose to do so. The availability of IBR for borrowers in adverse economic circumstances is also a point of interest for lenders wishing to use the Loan Purchase Commitment Program (put program) or Asset-Backed Commercial Paper Conduit Program (conduit) under the Ensuring Continued Access to Student Loans Act (ECASLA), since repayment delinquencies can affect loans selected for inclusion in these programs.

Why schools should attend
Borrowers, particularly those with relatively high federal loan debt, are keenly aware of the importance of entering the job market and achieving a reliable, adequate income. Unfortunately, they may feel pressured by those considerations to forgo employment in traditionally lower-paying professions, such as public service or social services. Financial aid staff can work to ensure borrowers understand that IBR provides reassurance to those borrowers that their loan payments will be manageable. IBR may also be an important tool for borrowers in adverse economic circumstances and could thus conceivably help borrowers from contributing to the school's cohort default rate.

Other resources
Need more information but can't attend the webinar? Shoptalk Online has covered this topic on several occasions since it was enacted through the College Cost Reduction and Access Act of 2007 (see especially editions 481 and 482). NASFAA provides a comprehensive summary of IBR in its review of the October 23, 2008, final rules (NASFAA membership may be required to view the summary). IBRinfo.org is a borrower-oriented site provided by the Project on Student Debt that offers a wealth of information about IBR in plain, understandable terms, and also features an IBR calculator to assist borrowers in determining their eligibility for the repayment option.

More information
Register for the webinar at http://event.on24.com/r.htm?e=135146&s=1&k=2A568B892043C6F3A6BBC05C62ED5793. Registration is free and open to any interested party. Since this is the first of several NCHELP-sponsored IBR webinar training sessions, Shoptalk Online will keep readers informed as the details for additional training opportunities are announced. Each webinar will focus on different aspects of IBR.

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E-ANN includes reminder of deadline to execute MLSA

Last week, ED released Electronic Announcement (E-ANN) #48, which reminds lenders of the March 31, 2009, deadline for executing the 2008-09 Master Loan Sale Agreement (MLSA) if they wish to sell 2008-09 FFELP loans to ED under the Loan Purchase Commitment Program (put program) available through the Ensuring Continued Access to Student Loans Act (ECASLA).

For lenders that have already executed a Master Participation Agreement (MPA) with ED to take advantage of the Loan Participation Purchase Program (participation program), the E-ANN reminds those lenders that they have until July 1, 2009, to execute the MLSA if they also want to use the put program to redeem any of the participation interest sold to ED.

For more information
The E-ANN is available online at http://federalstudentaid.ed.gov/ffelp.

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