July/August NewsLine Articles
On Friday morning, August 1, John Littell, mailroom clerk at the Louisiana Office of Student Financial Assistance (LOSFA), opened the first official Student Tuition Assistance and Revenue Trust, or "START" Saving Program account, for his 14-year-old daughter, LuAnn. This fall, LuAnn will be a freshman at Broadmoor High School in Baton Rouge. "Theres not much time left for me to save for her college education, and I wanted something safe," John says. "I thought this was a pretty good, reliable plan." John is not only the first person to open an account, but he is also the first to take advantage of the programs payroll deduction option.
Louisiana implemented this innovative college plan in record time. Jack Guinn, LOSFAs Executive Director, credits the amazingly quick start-up time -- one year from funding to implementation -- and the relatively small amount of start-up costs to the diligent efforts of LOSFAs Scholarship/Grant and Information Systems Divisions staff. Most of the work was done in-house, using the agencys existing infrastructure. Only one small contract for external services was utilized. Staff members designed the customized software which will be used to administer the program. Only two new employees have been added to administer the programs operation which began July 30.
Costs to implement the program were the lowest of any of the 19 states with active pre-paid tuition or college savings plans. Only $188,000 was provided by the state for start-up costs, $50,000 of which was invested to cover the state's matching grants. This amount compares favorably to the $2 million spent by Texas and the $1 million plus spent by Michigan and Ohio.
Guinn also commends two other state offices for their assistance in launching START. The Louisiana Department of Revenue and Taxation will verify the adjusted gross income of START account owners to ensure the correct annual allocation of tuition assistance grants.
The State Treasurers Office also actively supports START operations. It invests the account funds and assumes all managerial costs associated with their investment.
START was enacted in 1995. It encourages systematic savings, such as that available through an employers payroll deduction program, and it provides for the money to be professionally managed. All accounts earn interest at competitive rates, and Louisiana will allocate state tuition assistance grants on an annual basis to certain accounts, depending upon family income and the amount annually deposited in the account. Two of the state's leading newspapers, the Shreveport Times and the Lake Charles American Press, have published editorials endorsing the START Saving Program.
Newly passed federal legislation will favorably impact the START Saving Program. On August 5, President Clinton signed a major tax bill, which, while not eliminating the federal tax on earnings as was hoped, will continue to grant tax-deferred status to earnings until funds are disbursed from an account. At that time, earnings will be reported as income to the student-beneficiary and taxed at the student's lower rate. There was strong bipartisan support for exempting taxes on earnings from state-sponsored college savings programs, and congressional proponents have committed to pursue the exemption via future tax bills.
In addition to allowing the payment of tuition and mandatory fees, the new tax legislation permits savings to be used to pay for room and board, books, lab fees, and other charges assessed by the institution. It also provides that savings can be used to pay educational expenses at certain proprietary schools which are determined eligible by the U.S. Department of Education. In addition, the legislation has broadened the definition of "family member" to include additional members of a family to whom benefits may now be transferred.
Federal gift and estate tax treatment has been liberalized and simplified: a contribution to the START Saving Program is now considered a completed gift of a present interest, eligible for the $10,000 per recipient exclusion from gift tax. Gifts in excess of that amount to the same recipient may be spread over five years so they can qualify under the annual exclusion.
The new HOPE education tax credit of $1,500 per child for the first two years of college and up to $1,000 in subsequent years, can be claimed by middle-income families when savings are disbursed from a START account to pay qualified college expenses. Accordingly, taxes due on earnings disbursed from an account can be offset by the HOPE tax credit, and savings are now considered part of the beneficiarys estate.
All START account earnings may be used to pay qualified educational expenses at any accredited college or university in- or out-of-state, or at a state technical institute or eligible proprietary school.
To request a START application, call Customer Service at 1-800-259-5626, ext. 1012.
New Fax Number: The Pre-Claims and Collections Sections at LOSFA have a new fax number: (225) 922-0124. Clients also have access to two other fax numbers at LOSFA. Those who wish to fax material to The Executive Section, Customer Service or Loan Originations may use (225) 922-0790. (225) 922-1089 is the fax number for all other divisions including Legal and Policy and Scholarship/Grant.
Roberts Beauty College (#026009) withdrew from the Louisiana Student Loan Program on June 17, 1997.
High School Certification Listings of academic year 1997-98 applicants for the TAP and Rockefeller programs were mailed to state high schools on June 17, 1997. On July 8, 1997, the Scholarship/Grant Division also sent 2,891 TAP Income Verification Forms (IVF) to applicants for academic year 1997-98.
Education America - Southeast College of Technology, formerly R.E.T.S. Training Center, Metairie, LA, has been approved to participate in the LASFAC FFEL programs.
New Financial Aid Directors: As of June 2, Daryl Hankel replaces Jocelyn Green as the new Director of Financial Aid at the University of New Orleans. Darren Lyn has been promoted from Assistant Director for Computer Systems to Associate Director of Student Financial Aid at UNO. Julie Dupuy replaces Stephen Wyble as the new Assistant Financial Aid Director at Southeastern State University.
New Employees: Joining the LOSFA Customer Services Division are new Customer Service Representatives Michelle Klafke and Dale Hilton. Welcome!
Default Management News: Pre-Claim Administrator Lynda Downing reports that her staff successfully prevented 22,871 accounts, totaling $94,346,153, from entering default during SFY '97. Byron Henderson's Collections Section exceeded its yearly goal during the same period by collecting $11,903,131 on defaulted student loans.
New Lenders: Welcome to The Bank of Jennings, LA (LID #833378), contact Carolyn LeJeune, 318-824-0033; Household Bank of Wood Dale, IL (LID #803094), contact Kim Zerbe Artzer, 913-865-7084; American Express Educational Assurance Corp., San Diego, CA (LID #833289, 633289, and 733289), contact Jane Hughes, 619-350-1313 ext. 246; and Texas Commerce Bank of Los Angeles (LID #833174 and 832919), contact Jason De Bord, 310-979-4700.
The LASFAC Advisory Committee met on Tuesday, July 29, to discuss proposed new TOPS program issues.
The Louisiana Student Financial Assistance Commission (LASFAC) will hold its next monthly meeting on Tuesday, September 9, 1997, in the Louisiana Retirement Systems Building at 12:00 noon. It will be followed immediately by the monthly meeting of the Louisiana Tuition Trust Authority (LATTA).
On July 20, 133 high school seniors converged upon the campus of Northwestern State University (NSU) in Natchitoches to attend Trailblazer Camp, 1997.
Now in its fourth year, Trailblazer Camp is a unique program designed to teach students about financial aid and the college admissions process. The Trailblazers, in turn, then assist their high school guidance counselors by sharing the information they learned with their senior class peers when they return to school in the fall.
LOSFA stays in touch with the Trailblazers throughout their senior year to remind them about important dates and suggest ways they can assist their classmates in preparing for their first year of college.
This years Trailblazers were schooled on the Free Application for Federal Student Aid (FAFSA), the Student Aid Report (SAR), the new TOPS state scholarship program, student loans, ACT testing, and the college admissions process.
LOSFA staff members Winona Walker Kahao, Diane Pfeifer, Jennifer Burton, Sigmund Morel and Ian Scott were assisted by other professionals from the student assistance community: NSUs Mike Fuller, Chris Maggio, Jennifer Maggio and Misty Mayeux; Don Buehrer of Sallie Mae; Margaret French of American College Testing; and Janice Chapman from Bossier Parish Community College all shared their expertise with the Trailblazers.
Because many lenders participating in LOSFAs Federal Family Education Loan Program generously contributed financially to the Trailblazer Camp, the students were also able to enjoy some fun "extracurricular" activities which included a dance, complete with deejay, a pizza party and an ice cream sundae break. Lenders also attended the Camp on Tuesday morning and distributed informational materials and promotional items to the Trailblazers.
Every high school in Louisiana is invited and encouraged to designate an outstanding entering senior to attend the camp. For the past two years, Clarice Goodly, guidance counselor at Mamou High School, has accompanied her schools Trailblazer to the camp. According to Goodly, students often respond better to their peers than to adults. She feels it is beneficial to have a trained high school senior ready to offer financial information on a daily basis to his fellow students.
Mrs. Irene Mouton accompanied her daughter, Tashona, to Trailblazer Camp, and she suggested that there should be a place or time set aside for the parents. "The diverse and vast information provided is a definite necessity for the college bound student," Mrs. Mouton says. "I wish there were a smaller program for parents. The Trailblazer program is positively an asset to the education process."
Next years Trailblazer Camp is already in the planning stages and is scheduled for July 19-21, 1998, at NSU. For further information, or to volunteer services or assistance, call 1-800-259-5626, ext. 1012.
Thousands of phone calls from interested students and parents pour daily into LOSFA offices requesting information about the landmark scholarship program recently passed by the 1997 Legislature.
The Tuition Opportunity Program for Students, or TOPS, as it is known, is the most generous state program in the entire nation and is specifically designed to encourage the brightest Louisiana students to attend Louisiana colleges. It will, over the next five years, more than double the number of Louisiana high school graduates eligible to receive tuition waivers. The waivers will be available to students from families of all income levels and to students who have average grades as well as those who are academically gifted.
Any graduating high school student who achieves a 2.50 grade-point average in a college-preparatory curriculum and who scores the state average on the American College Test (ACT) is eligible to receive free college tuition. Open only to Louisiana residents, the program attempts to "make college affordable for every child in Louisiana," says Rep. Charles McDonald, D-Monroe, an author of House Bill 2154 that created the plan.
With the exception of the TOPS Teacher Award, which is funded for school year 1997-98, the TOPS program will make its first awards in 1998-99. TOPS allows students to seek awards based on different levels of academic achievement and provides extra assistance in the form of a cash stipend for students with higher grades and ACT scores. TOPS "puts some responsibility on the student," says Carol Coltharp, spokeswoman for the State Board of Regents, the policy-making board for higher education. "This says if you make good grades and take the right courses, heres a free education."
Although the program was originally intended to apply only to high school students graduating in 1998 and beyond, the Louisiana Student Financial Assistance Commission voted to extend eligibility for the TOPS Opportunity, Honors, and Performance Awards to 1997 graduates. (See "TOPS Scores Big with '97 Grads," page 10).
TOPS represents a major overhaul of two of the states existing scholarship programs: the Tuition Assistance Plan (TAP), also called the Taylor Plan, which started in 1989, and the Louisiana Honors Scholarship, which has been awarded to the top five percent of high school graduates since 1992.
Students who previously qualified for the TAP or Honors programs will be "grandfathered" by the TOPS program; they will continue to receive their annual awards as long as they qualify under the existing rules.
The three new programs are the Opportunity Award, which goes to average students completing a high school college prep course; the Performance Award, closest to the old Louisiana Honors Scholarship and earned by students who graduate in the top five percent of their high schools graduating class; and the new Honors Award, which is presented to outstanding students who may not be in the top five percent of their class but who meet very high academic standards.
Students in all three categories must take a minimum of 16.5 core units in the college prep curriculum, achieve minimum standards for their grade point average, and achieve a minimum score on the ACT. In addition to the payment of public college tuition, awards may now be used at Louisiana's independent colleges and universities. The state will contribute the equivalent of the statewide average public school tuition toward the cost of private school tuition.
The TOPS Opportunity Award is expected to impact the most students. TAP was available only to families with incomes of $35,000 or less (for a couple with one child). Family income wont be considered for the TOPS Opportunity Award, unless the state is not able to fully finance the program. In that case, the money would go first to lower-income students.
For the TOPS Opportunity Award, the qualifying composite score on the ACT will be variable and is pegged to the states average score (currently 19.4), but not less than a 19. The qualifying grade point average is 2.50.
The existing Louisiana Honors Scholarship program, which requires students to be in the top five percent of their graduating classes, will become the TOPS Performance Award. It pays tuition plus an additional stipend of $400 per year to those students in the top five percent of their graduating classes who achieve a 3.50 GPA and complete a 16.5 unit college preparatory curriculum. It also tightens qualifications from the current program to require students to score at least 23 on the ACT to receive their Performance Award. Under the previous plan, some students scored below the state average on the ACT and still qualified for the Honors Scholarship.
The TOPS Honors Award is a completely new award, and is intended to recognize students who possess outstanding academic credentials. This program will pay tuition plus an award of $800 per year to students who reach the highest level of scholarship. Students must earn a GPA of 3.50 and achieve an ACT score of 27 or more to qualify.
The stipends of $400 and $800 that accompany awards must be used to pay educational costs assessed by the student's postsecondary institution.
A fourth component of the program was created by House Bill 1932, also sponsored by Rep. McDonald and by Sen. Randy Ewing. Called the TOPS-Teacher Award, its purpose is to attract academically talented teachers into the states classrooms.
The Teacher Award will offer a generous loan stipend to talented students to use toward the attainment of their education degree. The loan is designed to be repaid by serving as a teacher in the state, with a year of teaching repaying a year of the stipend. Students planning to become math or chemistry teachers will receive $6,000 per year, and students planning to teach in other fields will receive $4,000 per year.
Unlike the other TOPS components, awards under the Teacher program will begin in the Fall of 1997 and will be competitive, meaning that those students with the highest combined scores based on the student's grades, standardized test scores, year in college, and college major, will be given first consideration. The standards for selection include a cumulative high school GPA of at least 3.25, the completion of 16.5 units in a college preparatory curriculum, and a score of 23 on the ACT.
To help identify candidates for the teacher program, LOSFA will screen federal aid application forms (the FAFSA) from high school graduates which indicate those students planning to teach. The students high schools will then verify those students who have the required high school curriculum and grade point average.
The deadline to apply for the award in the first year is November 1, 1997. Qualified students may attend any public or private university in Louisiana with an accredited teacher education program, and an undecided student can still apply before the academic year is over, if funding is not exhausted.
Teacher Award recipients are required to maintain a cumulative college grade point average of 3.00 and complete 24 semester hours per year. If the recipient fails to teach in Louisiana, the loan must be repaid with interest.
In order to continue receiving TOPS, Honors and Performance Awards, recipients must maintain a 3.00 GPA and earn 24 hours each academic year. Opportunity scholars must achieve a 2.10 GPA in their first year, but must increase it as they accumulate more than 48 credit hours. Award limits on all components of the program are four years or eight semesters, and eligibility is lost if the student is placed on academic probation, but can be reinstated.
About 6,800 students received state scholarships in the 1996-97 school year. As the ranks of eligible students swell, that number is expected to climb to more than 15,000 students by 2002. At that time, the cost of the program will exceed $45 million a year, more than three times the amount the state now spends on student aid.
Financing the first year of scholarships must be included in the state budget for 1998-99. "I dont think therell be a problem getting funds," says Jack L. Guinn, Executive Director of LOSFA. "The scholarships have always been a high priority with the legislature."
Tuition waivers for state funded technical schools are included in the package. These awards will assist students who are hoping to learn a trade and immediately enter the job market. For-profit schools are excluded from the programs.
The matrix on Page 9 charts specific elements of each scholarship award. Those requiring more information may speak to a Customer Service Representative at 1-800-259-5626, ext. 1012.
All of the TOPS awards require 16.5 units of high school course work constituting a core curriculum as follows:
1 English I
1 English II
1 English III
1 English IV
1 Algebra I (no substitutions)
1 Algebra II
1 Geometry, Trigonometry, Calculus or Comparable Advanced Math
1 Biology I
1 Chemistry I
1 Earth Science, Environmental Science, Physical Science, Biology II, Chemistry II or Physics
1 American History
1 World History, World Cultures, Western Civilization or World Geography
1 Civics and/or Economics/Free Enterprise
1 Fine Arts Survey (or substitute two units of Performance courses in Music, Dance, and/or Theater; or substitute two units of Studio Art; or substitute one unit of an elective from among the other subjects listed in this core curriculum)
2 Foreign Language (2 units in the same language)
1/2 Computer Science, Computer Literacy, or Data Processing; (or substitute at least one-half unit of an elective from among the other subjects listed in this core curriculum)
Completion of the core curriculum is a prerequisite for eligibility in the TOPS programs. High school seniors who are potential applicants for the TOPS Honors and Opportunity Awards must complete the core curriculum during the 1997-98 academic year in order to be eligible for these two awards. Completion of the core curriculum is not required for applicants of the Performance Award until the graduating class of 2001.
To gain access to the detailed student information screens, schools must request and complete the OnLine Loan Connection Access Form and Web Communications Agreement, which state the terms and conditions of the online access. Within 5-7 days after USA Group receives the completed forms, the school will receive an E-mail notifying it of its Teleview ID and password.
Financial aid administrators may request the OnLine Loan Connection Access Form and the Web Communications Agreement by visiting the website and completing the online Request for Teleview ID and Password Documents. The forms will be forwarded immediately upon request.
Administrators who have questions about requesting the Teleview ID and Password for their institutions may contact a LOSFA Customer Service Representative at 1-800-259-5626, ext. 1012.
High school seniors who graduated on or after August 15, 1996, may apply for Louisianas new TOPS awards.
Although these graduates may be eligible to apply for the program during the current year, the financial awards cannot be made until the 1998-99 academic year. That means that students who might be eligible for the program will have to pay their college expenses this year. It also means that students who attend college in the current year must earn at least 24 semester hours and achieve a grade point average that will qualify them for continuation in TOPS and an award in academic year 1998-99.
To be eligible next year for the TOPS-Opportunity Award, which pays college tuition, a student attending college this fall will have to attain a minimum 2.1 grade point average. To be eligible for the new TOPS-Honors Award, students attending college must earn a 3.0 cumulative grade point average during this coming academic year. This award pays tuition at a public college or average public tuition at an independent college, and $800 per year.
In making 97 graduates eligible for TOPS, the state will reopen its application period for financial aid to enable students who will no longer be first-time freshmen in academic year 1998-99, to apply for the Opportunity Awards. To be considered, these students need only to complete the Free Application for Federal Student Aid School Year 1997-98 (FAFSA) not later than December 15, 1997. Students who have already completed this form will automatically be considered and should not submit another form.
The state is also accepting applications from undergraduates who are pursuing a program of instruction that leads to certification as a teacher. The new TOPS-Teacher Award is authorized and funded for the current year, and applicants are being sought who are interested in teaching in Louisianas classrooms. Loans of up to $6,000 per year are available and can be repaid by service as a classroom teacher. To apply, students who will be college undergraduates during academic year 1997-98 need only complete the FAFSA by November 1. Students who have already submitted the form should not submit another.
Copies of the emergency rules governing the program can be obtained by calling toll-free 1-800-259-5626, ext. 1012.
Thank you so very much for the scholarship award. It means a great deal to me to be able to earn my way through college. The programs like the Louisiana Honors Scholarship are the best programs that our state could fund. I believe that Louisiana should reward its best and brightest regardless of income. Please continue to fund this program and others like it. It means so much to students like me who work hard to achieve. I will work hard to live up to the standards of the Louisiana Honors Scholarship. Once again, thank you for the confidence you have placed in me. It is appreciated.
Chad Smith, Class of 1997
Pitkin High School, Vernon Parish
Received May 30, 1997
For Quarter Ending June 30, 1997
Loan Program Bulletin Dated July 3, 1997, and addressed to Lenders, contains Special Allowance Rates Calculated from Quarter Ending June 30, 1997.
If you need a copy of the bulletin or other information, please call a LOSFA Customer Representative at 1-800-259-5626, ext. 1012.
Annual Rate Annual Rate Factor
Loans prior to 10/1/81
7% .0175 .004375
9% .00 .0000
Loans from 10/1/81 to 11/16/86
7% .0171 .004275
8% .0071 .001775
9-14% .00 .0000
Loans from 11/16/86 to 10/1/92
7% .0146 .00365
8% .0046 .00115
8.26% .002 .0005
8.41% .0005 .000125
9-14% .00 .00
Loans from 10/1/92
6% .0231 .005775
7% .0131 .003275
8% .0031 .000775
8.25% .0006 .00015
8.26% .0005 .000125
8.72-14% .00 .00
on/after 7/1/95 only
during in-school, grace and deferment
7.66% .0005 .000125
Tax-exempt loans prior to 10/1/81
7% .025 .00625
9% .005 .00125
Tax-exempt loans from 10/1/81
6% .035 .00875
7% .025 .00625
7.66% .0184 .0046
8% .015 .00375
8.25% .0125 .003125
8.26% .0124 .0031
8.41% .0109 .002725
8.72% .0078 .00195
9% .005 .00125
10%-14% .00 .0000
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LOSFA Customer Services Division.
Mona Smith Kraushaar: Co-editor
Ian Scott: Co-editor
Diane Pfeifer: Director
Byron Henderson - Collections
Winona Kahao - Scholarship/Grant
Kathy Mascaro - Legal/Policy
Susan McManus - Compliance
Juanita Rougeau - START