NASFAA Summary of Student Aid Provisions in the Health Care and Education Reconciliation Act of 2010

The Health Care and Education Reconciliation Act of 2010 (HCERA) fulfills the reconciliation instructions included in the FY 2010 budget resolution and makes major changes to the federal student aid programs. The reconciliation bill was passed by both the House and Senate on March 25, 2010 and was signed by President Obama on March 30, 2010.

The following summarizes the student aid provisions in the reconciliation bill. The full text of the reconciliation bill is available online.

Mandatory Pell Add-Ons  

Pell Grant maximums in future years would be changed to reflect an appropriated base with a mandatory add-on. From 2014-15 through 2017-18, increases to the mandatory add-on would be based on estimated changes to the consumer price index (CPI). The add-ons would be calculated as follows.

    For 2012-13, the bill reduces the previous mandatory add-on from $1090 to $690 (the $690 add-on is maintained for 2010-11 and 2011-12).

    For 2013-14, the bill establishes a mandatory add-on equal to:

      [Greater of $5550 or prior year's maximum (i.e., total of appropriated amount + mandatory add-on), increased by estimated percent change in the CPI for the 2013-14 year] minus [Greater of $4860 or prior year's appropriated maximum, rounded to the nearest $5]

    For 2014-15 through 2017-18, the bill establishes add-ons of:

      [Prior year's maximum (i.e., total of appropriated amount + mandatory add-on), increased by estimated percent change in the CPI for the most recent calendar year ending prior to the beginning of that award year] minus [Greater of $4860 or prior year's appropriated maximum, rounded to the nearest $5]

    For 2018-19, the bill establishes an add-on that will equal the add-on from 2017-18.

Amount of Minimum Pell Grant: The bill revises the minimum Pell Grant from 10 percent of appropriated maximum to 10 percent of total maximum (appropriation + mandatory add-on). The HCERA increases the maximum Expected Family Contribution (EFC) for Pell Grant eligibility for the 2010-11 award year to 5273. Previously, the maximum EFC for Pell Grant eligibility was 4617. Revised 2010-11 Pell Grant Payment and Disbursement Schedules have been posted by the Department.

Amount of Pell Grant for Study Abroad: Continues to allow the Pell Grant to be exceeded for study abroad but caps the grant at the total maximum (appropriation + mandatory add-on) rather than the appropriated maximum

Appropriation for Pell Grant Shortfall: The bill appropriates $13.5 billion to fund projected short-falls in Pell appropriation levels through fiscal year (FY) 2012

Income-Based Repayment (IBR): Beginning on July 1, 2014, new borrowers will qualify for IBR if the borrower's standard repayment exceeds 10% of discretionary income (reduced from the current 15%), and the income-based repayment amount is lowered to 10 percent of the borrower's discretionary income. (Discretionary income is the amount of the borrower's AGI that exceeds 150% of the poverty line for the borrower's family size.) Loan forgiveness occurs after 20 years of repayment rather than the current 25. This recommendation was included as part of NASFAA's National Conversation Initiative.

Elimination of the Federal Family Education Loan Program (FFELP): No new (first disbursed) Stafford, PLUS, or consolidation loans may be disbursed through the FFEL program after June 30, 2010.

In-School Consolidation: Borrowers who have loans in the Direct Loan program, the FFEL program, or loans purchased by the Department under ECASLA may consolidate those loans into a Direct Consolidation loan between July 1, 2010 and July 1, 2011. The borrower must have at least one loan in each of two of the three categories named, and have not yet entered repayment on at least one of those loans. NASFAA advocated for the return of in-school consolidation to deal with borrower repayment issues in regards to FFELP, ECASLA, and Direct Loans.

Authorization of Direct Loans for Foreign Schools: Schools outside of the United States are now authorized to participate in the Direct Loan program. Loan funds will be disbursed through a financial institution located or operating in the U.S. and designated by the Secretary of Education.

College Access Challenge Grant Program: Funding for the program is increased to $150 million annually from FY 2010 through FY 2014.

Servicing Contracts for State Non-Profits: Non-profit state entities that are not owned or controlled in whole or in part by a for-profit entity and has its principal place of business in that respective state can be eligible for Direct Loan servicing contracts in that state. The nonprofit entity must meet the standards for servicing that apply to other DL servicers. The Secretary may reallocate, increase, reduce or terminate an eligible non-profit servicer's allocation based on the performance of such servicer.

Assistance to Institutions Participating in the DL Program: The Secretary is required to provide technical assistance to institutions of higher education participating or seeking to participate in the Direct Loan Program and is given $50 million for fiscal year (FY) 2010 in funding to provide such assistance.

TAA for Communities: Appropriates $500 Million a year for fiscal years 2010 through 2014 in the Community College and Career Training Grant program for community colleges to develop and improve educational or career training programs. Ensures that each state receives at least 0.5 percent of the total funds appropriated.

Tracking the Bill   

H.R. 4872: Health Care and Education Reconciliation Act of 2010
Introduced Mar 17, 2010
Sponsor Rep. John Spratt [D-SC5]  
Status Enacted
Last Action  Mar 30, 2010: Became Public Law No: 111-152.
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Publication Date: 3/22/2010

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