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Federal Updates

Shoptalk Online 511, July 7, 2009

Federal Updates

President signs technical corrections bill to HEA

Last week, the President signed H.R. 1777 into law, making numerous changes to the Higher Education Act of 1965, as amended (see Shoptalk Online edition 510 for details on the legislation). The changes found in H.R. 1777 are generally retroactive. They will be considered to be effective as of the date of enactment of the Higher Education Opportunity Act (HEOA), or August 14, 2008.

One of the changes of most urgency to schools is the acceleration of the exclusion of federal veterans education benefits from the definition of estimated financial assistance (EFA) for the Title IV student assistance programs. This exclusion was scheduled to take place beginning July 1, 2010; H.R. 1777 moves that date to July 1, 2009.

In an Electronic Announcement, ED provided guidance on this change that reads, in part: "This exclusion applies to all federal veterans education benefits regardless of whether the benefits are received by the veteran, his or her spouse, or his or her dependent. As in the past, veterans education benefits are not considered as income in calculating the expected family contribution (EFC) for a student.

Many institutions have already packaged students for the 2009-10 award year. However, an institution must review 2009-10 award year financial aid packages for students receiving federal veterans education benefits to determine whether changes to any of the packages are necessary. That review may result in an increase in a student's eligibility for a loan under the FFEL or Direct Loan programs."

The veterans benefits affected by this change include, but are not limited to, the benefits under the following statutory authorities:

Chapter 103 of title 10, United States Code (Senior Reserve Officers' Training Corps).
Chapter 106A of title 10, United States Code (Educational Assistance for Persons Enlisting for Active Duty).
Chapter 1606 of title 10, United States Code (Selected Reserve Educational Assistance Program).
Chapter 1607 of title 10, United States Code (Educational Assistance Program for Reserve Component Members Supporting Contingency Operations and Certain Other Operations).
Chapter 30 of title 38, United States Code (All-Volunteer Force Educational Assistance Program, also known as the 'Montgomery GI Bill — active duty').
Chapter 31 of title 38, United States Code (Training and Rehabilitation for Veterans with Service-Connected Disabilities).
Chapter 32 of title 38, United States Code (Post-Vietnam Era Veterans' Educational Assistance Program).
Chapter 33 of title 38, United States Code (Post-9/11 Educational Assistance).
Chapter 35 of title 38, United States Code (Survivors' and Dependents' Educational Assistance Program).
Section 903 of the Department of Defense Authorization Act, 1981 (10 U.S.C. 2141 note) (Educational Assistance Pilot Program).
Section 156(b) of the 'Joint Resolution making further continuing appropriations and providing for productive employment for the fiscal year 1983, and for other purposes' (42 U.S.C. 402 note) (Restored Entitlement Program for Survivors, also known as 'Quayle benefits').
Chapter 3 of title 37, United States Code, related to subsistence allowances for members of the Reserve Officers Training.

For more information
Watch future editions of Shoptalk Online for further analysis of the legislation's affect on the federal student aid programs.

The complete Electronic Announcement regarding the treatment of veterans benefits is located on the Information for Financial Aid Professionals (IFAP) Web site at http://ifap.ed.gov/eannouncements/070209FederalVeteransEducationBenefits.html.

To access the text of H.R. 1777, 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. 1777," click on "Bill Number," and then "Search." On the resulting table, click on "Text of Legislation," then choose the link after item 4: "To make technical corrections to the Higher Education Act of 1965, and for other purposes. (Enrolled as Agreed to or Passed by Both House and Senate)[H.R. 1777.ENR]."

For questions, contact TG customer assistance at (800) 845-6267, or send an e-mail message to cust.assist@tgslc.org.

Remaining 2009-10 interest rates released

Two categories of interest rates were announced at the end of June, as mentioned in Shoptalk Online edition 506. Interest rates for older PLUS and SLS loans are based on the weekly average of the one-year constant-maturity Treasury yield for the last calendar week ending on or before June 26. Interest rates for the HEAL portion of Federal Consolidation loans are based on the 91-day Treasury bill (T-bill) auctioned for the quarter ending June 30.

PLUS and SLS
Following are the interest rates for older PLUS and SLS loans, which are effective July 1, 2009, through June 30, 2010:

3.58 percent for loans first disbursed on or after October 1, 1992, but before July 1, 1998.
3.73 percent for loans disbursed on or after July 1, 1987, but before October 1, 1992.

HEAL Consolidation
Following is the interest rate for the HEAL portion of Federal Consolidation loans:

3.18 percent for loan applications received on or after November 13, 1997.

More information
To access TG's annual interest rate chart for all applicable interest rates, visit www.tgslc.org/policy/intrates.cfm.