Federal Legislative Update #4

9/17/03

1. Higher Education Act Reauthorization

Higher Education Act reauthorization has been heating up since Congress returned from recess earlier this month. The piecemeal approach to reauthorization continues.

Representative Cole (R-OK) introduced H.R. 3039 Expanding Opportunities in Higher Education Act on September 9th.The primary purpose of H.R. 3039 is to ensure that the institutions seeking to serve students, and particularly needy or nontraditional students, are treated fairly and equitably under the Higher Education Act.

Representative Pete Hoekstra (R-MI) introduced the International Studies in Higher Education Act (H.R. 3077) to strengthen international studies in higher education, and to contribute to fulfilling national security needs.

Representative Hoekstra also introduced the Graduate Opportunities Act (H.R. 3076) which intends to strengthen the federal investment in graduate education by recognizing changes in graduate education and adopting greater flexibility to embrace new needs as they emerge. 

2. H.R. 3039 Expanding Opportunities in Higher Education Act

Title III

H.R. 3039 would reauthorize the GEAR UP and TRIO programs. The significant change proposed for Trio would be the elimination of the requirement to provide grantees 15 additional points, but still require the Secretary to award current grantees an undefined additional amount of points.Under current law, current TRIO grantees receive 15 additional points in TRIO grant competitions due to their prior experience in operating a TRIO program. There is concern that this change will undermine successful programs by placing their continued funding at risk.

Other programs under Titles III slated for continuation include Historically Black Colleges and Universities and Tribal colleges and Title V - Hispanic Serving Institutions. The bill strengthens the High School Equivalency Program and College Assistance Migrant Program. The bill would simplify the criteria for families eligible to complete the financial aid need test form and require improved efforts to inform students and families who qualify for the free lunch program or food stamps of their potential eligibility for a maximum Pell grant. Congressman Emanuel (D-IL) championed this last provision.

Definition of Institutions of Higher Education

Presently, there are two definitions of Institutions of Higher Education. The first definition makes non-profit colleges and universities eligible for participation in Title IV programs, as well as all of the other HEA programs (teacher quality, graduate education, and others). The second definition makes for-profit institutions eligible for only the grant and loan programs of Title IV. H.R. 3039 would allow for-profit institutions to be eligible for all HEA programs. This would dilute resources presently available for public and private non-profit institutions and allow for-profit institutions to receive grant funding typically reserved for minority serving institutions and institutions that serve large numbers of disadvantaged students. For the first time, money that is reserved for institutions with a public interest mission that serves predominantly minority and low-income students would become available to for-profit schools.

90/10 Rule

Related to the above change, H.R. 3039 would repeal the current requirement that for-profit institutions derive 10 percent of their revenue from non-federal sources.

This would allows a for-profit institution to receive up to 90 percent of its total income revenue from Pell Grants, loans, etc. and to potentially rely on Pell grants and student loans for operational expenses and their profit margin This 90/10 rule was first enacted as part of the 1992 HEA amendments. Originally the rule allowed for an 85/15 split and was referred to as 85/15. The 85/15 rule was changed to 90/10 in the 1998 HEA reauthorization. The 85/15 rule was implemented to stem massive fraud and abuse in the student aid programs. The 90/10 rule now operates as a means to ensure that for-profit institutions of higher education have the capacity to stay in business and deliver a quality education to their students.

50% Rule

To encourage more distance education delivery, H.R. 3039 would repeal the requirement that prohibits institutions from offering more than 50% of their courses via distance education or having more than 50% of their students enrolled in distance education courses. Oversight provisions for this elimination are considered by many to be insufficient. Other bills brought forward on this issue include H.R. 12 (McKeon, R-CA) which would allow institutions with lower than a 10% cohort default rate for each of the three most recent years to offer telecommunications courses in excess of the 50% rule. H.R. 2193 (Andrews, D-NJ) would allow institutions to offer telecommunication courses to students if the institution met additional financial standards related to financial aid distribution and had their distance education programs accredited by an agency that is approved to accredit distance education program by the United States Department of Education.

Tuition Increases

The House of Representatives Education Committee leadership released a paper known as "The College Cost Crisis." This controversial report declares that the nation's higher education system is in crisis as a result of exploding cost increases that threaten to put college out of reach for low and middle income students and families. It concludes that decades of cost increases, in both good economic times and bad, have caused America's higher education system to reach a crisis point. The Association for State Colleges and Universities contend that the criticism toward tuition increases is wrongly focused. In 27 states, these determinations are made by state governing or coordinating boards. In 9 states tuition increases are made by governors and state legislatures. Only in 14 states are tuition increases made on individual campuses, and then they are enacted by a board of lay citizens either appointed or elected through the political process.

An emerging discussion around tuition increases and the decline of support for higher education at the state level is the correlation with higher health care costs. As health care

costs go up Medicaid costs to the state go up and available state money for higher education (and other expenditures) goes down. Medicaid is the most rapidly growing cost in most states.

3. International Studies in Higher Education Act

A bill titled the "International Studies in Higher Education Act (H.R. 3077) was introduced by Representative Pete Hoekstra (R-MI) to enhance international and foreign language studies in higher education in order to improve postsecondary education while helping to fulfill national security needs. Hoekstra emphasized the need to provide support for programs at U.S. colleges and universities that advance knowledge of world regions, encourage the study of foreign languages and train Americans to have a level of international expertise and understanding. The intent of this bill is to encourage additional coordination between programs at institutions of higher education and the agencies that fulfill critical homeland security needs. H.R. 3077 builds on the international and foreign language studies programs already existing, adding new oversight and accountability through an advisory board. This advisory board, which would be created in consultation with homeland security agencies in order to ensure appropriate coordination between education and national security goals, will advise and make recommendations to Congress and the Department of Education on international education issues. The bill also updates the purposes of Title VI programs to reflect the current international climate, particularly noting the effect of September 11, 2001 on international education. International studies will not be limited to postsecondary education. The bill would allow these programs to serve as national resource centers for K-12 education, providing information on courses and instruction to be used in elementary and secondary school classrooms.

4. Graduate Opportunities Act

H.R. 3076 will build upon the continued success of graduate education programs focusing on research and advanced technology. In addition, H.R. 3076 targets an urgent need for highly qualified faculty and teachers in subject areas facing severe shortages. The Graduate Opportunities Act is closely tied to the No Child Left Behind Act and its goal of placing a highly qualified teacher in every public classroom by the 2005-2006 school year. The Graduate Opportunities Act will encourage students to receive advanced training in subject areas like math, science, special education, and the education of students with limited English proficiency (LEP) which are facing dire shortages in classrooms across the country. It is expected that by increasing study in these areas at the graduate level, a pipeline of trained faculty will help alleviate shortages at the K-12 level.

5. Hope Scholarship Tax Credit

Another bill to watch in the House is H.R. 442 which would amend the Internal Revenue Code of 1986 to allow the Hope Scholarship Credit to cover fees, books, supplies, and equipment and to exempt Pell Grants and federal supplemental educational opportunity grants from reducing expenses taken into account for the Hope Scholarship Credit. The bill would stop the practice of deducting Pell and SEOG grants from a student's "qualified tuition and related expenses," which is used to determine HOPE eligibility. This change is expected to expand low‑income students' access to the HOPE credit. The measure's price tag has been estimated at $3.3 billion over the next 10 years.

6. Workforce Investment Act

An evolving bill is under discussion as the Senate continues to consider its own version of WIA reauthorization legislation. Staff are building a bill based upon current law, as the House of Representatives did with their version (H.R. 1261), which passed the House in late May. After the Senate committee's bill clears the full Senate, a House-Senate conference committee will meet to work out differences between the two versions.