Legislative Notes for July 25, 2007

Federal Update

For those of you keeping track, there are three pieces of legislation that have been taken up in one or the other or both chambers in the last month that relate to higher education; the Higher Education Act reauthorization, budget reconciliation legislation, and the Education spending bill (Labor, Health and Human Services, Education bill). (Recall last year, budget reconciliation was used to make policy and funding changes related to HEA without actually reauthorizing HEA). In an effort to make it easier to follow, here are the differences between these key pieces of higher education legislation and where they are in the process.

Higher Education Act

The Higher Education Act (HEA) authorizes the federal government's major student aid programs, as well as other significant initiatives such as services to help students complete high school and enter and succeed in postsecondary education, aid to strengthen institutions, and aid to improve K-12 teacher training at postsecondary institutions.

Congress has reauthorized HEA seven times, and the current authorization expired on Sept. 30, 2004 but has been extended multiple times in the past three years to keep the legislation active until Congress could take up the bill. One of the big hurdles for this Congress will be getting the Higher Education Act reauthorized. The Senate made a step toward that hurdle this week by unanimously passing the Higher Education Amendments of 2007 (S. 1642). The Senate must now wait for the House Committee on Education and Labor to take up HEA reauthorization, which is expected sometime this fall.

The legislation includes some substantial changes in programs important to higher education. Among the key provisions, the legislation;

• Incorporates elements of the Sunshine Act that would increase restrictions on the relationships between lenders, guarantee agencies and institutions; simplify the student financial aid form; and expand eligibility for low income students.

• Imposes new reporting requirements in the areas of tuition and cost of attendance, including the creation of a “Higher Education Price Increase Watch List” that would rank institutions by a still-to-be-determined “price index.”

• Requires institutions to publish their policies regarding the transfer of academic credit.

• Requires that accreditors put greater emphasis on student learning outcomes in reviewing institutions.

Also included in the bill was an amendment by Sen. Tom Coburn, R-Oklahoma and amended by Sen. Edward M. Kennedy, D-Massachusetts, that ensures that federal grant and student aid funds are not used to lobby the federal government. Other amendments included on the floor this week include; creating a federal student loan clearinghouse to enable students to shop around for the best loan terms; requiring teacher-preparation programs, as a condition of receiving federal student aid, to set "annual, quantifiable" goals for increasing the number of prospective teachers trained in high-need areas such as mathematics, science, and special education; requiring the Government Accountability Office to study the feasibility of collecting information on the employment of college graduates; and authorizing federal funds for 80 Upward Bound programs that lost their grants this year, including 21 programs at historically black colleges and universities. (The Upward Bound Program provides grants to colleges and organizations to prepare low-income high-school students for college).

Budget Reconciliation

Congress has also passed fiscal year 2008 budget reconciliation legislation. Both the House and Senate education committees have passed amendments to the Higher Education Act through the budget reconciliation process that would significantly impact federal student aid policy over the next 10 years. Congress is using this budget reconciliation to find savings in lender subsidies to direct new spending towards student aid and other education programs. The House and Senate passed different versions, and the difference between the bills now must be ironed out by a conference committee made up of members from both chambers before the start of the new federal fiscal year on October 1.

The House version of the budget reconciliation, called the College Cost Reduction Act of 2007 (H.R. 2669), passed by a vote of 273 to 149. The bill cuts $19 billion in government subsidies to student lenders and uses the savings to expand federal student aid, including raising the maximum Pell Grant award by $200 in 2008-2009 and by additional amounts each year until the increase reaches approximately $5,200 in 2012 and beyond. (http://www.mnscu.edu/about/legislative/updates/weeklyupdates/2007/lfed070907.html).

Similar to the reconciliation bill passed by the House, the Higher Education Access Act (S. 1762) was approved in the Senate last week. This bill provides a total of $17.3 billion in new funding for student aid programs over five years, paid for by reducing subsidies to lenders in the federal student loan program by $18.3 billion. The maximum Pell Grant would increase to $5,100 next year and $5,400 by 2011 through the use of the newly-created “Promise Grant” program. Significant amendments approved on the Senate floor include a proposal offered by Sen. Edward Kennedy, D-Massachusetts, that would provide an additional $5 billion for Pell Grants from 2012 to 2017. Also approved was Sen. Lisa Murkowski's, R-Alaska, proposal to use $176 million originally targeted toward deficit reduction to expand a new program aimed at helping states encourage low-income students to go to college.

Labor, Health and Human Services, Education Appropriations Bill

The House approved a $607 billion spending bill for education, health and labor programs for the 2008 fiscal year last week by a vote of 276-140. The bill includes $151.5 billion in discretionary spending and an increase in the Pell Grant maximum award by $390 to $4,700.

The bill also keeps in place funding for the Supplemental Educational Opportunity Grants (SEOG) program, the Leveraging Educational Assistance Partnership (LEAP) program, and the Perkins Loan program, which President Bush proposed eliminating in his budget proposal for fiscal year 2008. Overall, the bill would provide an increase of nearly 5 percent over this year's spending levels and $10.6 billion more than the president proposed.

The Senate Appropriations committee has passed their version of the bill and it will head to the full Senate next. The Senate bill provides $16.3 billion total in student financial aid. Teacher Quality State Grants and Perkins Career and Technical Education State Grants would be level-funded and the Pell Grant maximum would remain frozen at $4,310. Though the Senate has "frozen" the discretionary funding for the maximum Pell Grant award in this appropriations bill, they do appropriate $30 billion in new Pell Grant funding over 10 years through the budget reconciliation process. Also in the appropriations bill, federal TRIO and GEAR UP receive $30 million more and $10 million more, respectively, than in fiscal year 2007.

Once the Senate passes the legislation, it will head to conference committee where conferees from both chambers will iron out the differences in the bills. Stay tuned.