Federal Legislative Update #5

10/21/03

Congress continues to juggle a full agenda within a tentative political climate, huge issues related to Iraq, a budget debate on the home front and an intensifying presidential campaign.

On the higher education front, Congressman Howard P. "Buck" McKeon (R-CA), Chair of the House Subcommittee on 21st Century Competitiveness, introduced the Affordability in Higher Education Act of 2003 as part of the reauthorization of the federal Higher Education Act. The bill has four primary components:

Consumer Information/Institutional Accountability (College Affordability Index) Consumer Information

The bill charges the U.S. Department of Education, through the National Center for Education Statistics, to annually disseminate the following data for all Title IV-eligible institutions:

• tuition/fees charged to full-time undergraduate students,
• room/board charges for full-time undergraduate students,
• cost of attendance for a full-time undergraduate student,
• average amounts of various forms of financial assistance received by undergraduate students,
• the number of full-time undergraduates receiving various forms of financial assistance, and
• the institution's instructional expenditure per full-time equivalent student.
• Institutional Accountability related to Affordability

The bill creates an affordability index (effective in 2008), which represents change in the Consumer Price Index over a three-year period multiplied by two. Colleges' and universities' percentage change in tuition and fees over the same period is compared with the index. If the change in tuition and fees exceeds the index, the institution is required to develop and file a two-year management plan with the Secretary of Education. Additionally, the management plan process would require the participation of non-institutional entities with direct authority for tuition-setting (i.e. system/statewide boards, legislatures).

If the institution fails to comply with its plan, it would then be eligible for sanctions, including removal from eligibility for Title IV programs (excluding the Pell Grant and student loan programs).

Exceptions: A college or university is exempt from the management review and sanction component of this section if:

Its change in tuition and fees over the three-year period does not exceed the index.

Its third-year tuition and fees fall within the lowest quartile of institutions within its sector

Its increase does not exceed its indexed increase by more than $500.

Cost Containment Demonstration Projects

The bill would establish a program under which up to 100 Title IV-eligible institutions per year could request that a specific Higher Education Act requirement or regulation be waived, provided that the institution can demonstrate improved cost effectiveness as a result of the waiver.

Transfer of Credit

The bill would require that Title IV-eligible institutions declare as part of their Program Participation Agreement with the Department of Education that it does not reject academic credit transfer applications solely on the basis of the accreditation of the "sending" institutions. Additionally, the bill would require campuses to report their transfer credit acceptance rate to the Secretary of Education.

It is doubtful that the Affordability in Higher Education Act of 2003 will pass in its present form. The major concerns are focused on the creation of an affordability index and the requirement for a management plan if the change in tuition and fees exceed the index.