Government Relations Archive

Last Friday, Congress approved legislation that will provide the largest increase in federal student aid since the GI Bill. The Bush administration had threatened a veto against the House version of the bill, but after compromise legislation was drafted, President Bush withdrew his veto threat.

The bill (H.R. 2669, The College Cost Reduction and Access Act) would slash government subsidies by almost $21 billion to student-loan companies and use the savings to reduce the federal deficit, raise the maximum Pell Grant to $5,400 by 2012, and halve the interest rate on subsidized student loans from 6.8 percent to 3.4 percent. It also simplifies the financial aid process for low-income students by increasing the income level at which a student is automatically eligible for the maximum Pell.

In addition, the bill will make several changes aimed at helping borrowers who have taken on unmanageable levels of debt, including capping monthly loan payments at 15 percent of discretionary income and creating a new loan-forgiveness program for direct-loan borrowers who go into public service. It also protects student workers by ensuring they are not penalized by increasing the amount of student income that is sheltered from the financial aid process. It increases funding for the Department of Education’s Upward Bound, a key college access program, and creates College Access Challenge Grants to increase college outreach activities in every state. The bill also establishes new TEACH grants to provide scholarships of $4,000 per year for high-achieving undergraduate and graduate students who commit to teaching in a high-need subject in a high-need school.

The Higher Education Act reauthorization has been split into two bills and this reconciliation legislation is the first. The second bill will address non-spending higher education issues such as new reporting requirements, accreditation, and measuring student learning outcomes. The Senate has already passed its broader Higher Education Act reauthorization bill and the House is under considerable pressure to unveil a companion piece of legislation.

Congress will be back in session and there will be a flurry of legislative activity on issues of interest to the higher education community.

The reconciliation bill will be at the top of the legislative agenda. The bill cuts student loan subsidies to lenders then uses them to increase funding for student aid. It is the first part of the HEA reauthorization, but it was done as a separate budget bill to speed its consideration in both chambers.

Congress will also take up the FY 2008 education appropriations bills. The National Association of Independent Colleges and Universities (NAICU) supports the House version, which includes a $390 increase in the Pell Grant maximum to $4,700, increases the TRIO and GEAR UP Programs and does not cut SEOG and LEAP. The Senate bill has not been to the floor yet, but maintains the Pell Grant maximum – the Senate hopes to further need-based aid through the reconciliation bill.

There is also a tax higher education bill that will receive consideration this fall. NAICU reports that it is a “$20-$25 billion tax package that would combine popular higher education tax incentives – Hope and Lifetime Learning credits and tuition deduction – into a single super credit.”

Lastly, the House education staff is working on their version of the Higher Education Act (HEA) reauthorization.

Bill to Increase Sunshine on Earmark Recipients Approved by Congress

Last Thursday, Congress approved legislation entitled the Honest Leadership and Open Government Act of 2007 to overhaul rules governing college lobbyists and to increase public disclosure about academic earmarks. The bill generally bans gifts to lawmakers from lobbyists, but protects existing rules that provide no limit on the value of gifts from state universities. The bill also allows members to remove individual earmarks that are inserted into final versions of appropriations bills that were not included in the original House or Senate versions. Senior members of Congress often drop in additional earmarks in final versions so that there is little time for debate or examination.

It remains to be seen how much new disclosure will be required under the bill. Traditionally, Congressional appropriations committees have released no comprehensive information about the sponsors or intended recipients of earmarks, in an effort to avoid public scrutiny. The bill would now require that lawmakers sponsoring each earmark be identified publicly.

The Chronicle of Higher Education has reported that earmarks for colleges increased six-fold from 1996 to 2003. The new Democratic Congressional leadership did order a one-year hiatus on most earmarking for 2007. Congressional leaders have restarted the practice again in 2008, although they have pledged to cut total earmark spending in half. Many believe that given all the scandals, many lawmakers who had originally opposed the bill voted in support of it.

President Bush is expected to sign the measure into law.

Congress Approves Competitiveness Bill

Last week Congress also approved HR. 2272 to authorize more spending on science research and science education at colleges and universities to improve America’s global economic competitiveness. Even though it increases spending, Congress would have to appropriate funds through separate bills.

Among other things, the bill calls for an increase in spending for the National Science Foundation and the Department of Energy’s Office of Science during the next three years.

On July 26 the Senate passed the Higher Education Act reauthorization bill (S. 1642) by a vote of 95-0. There were few changes made to the bill during the two days of debate.

Among other things, the Senate bill:

• Raises the maximum Pell Grant to $6,300, and sets the minimum Pell Grant at 10 percent of the maximum award – an increase from the minimum now of $400.

• Restricts the use of preferred lender lists, places strict limits on what lenders and guarantee agencies may offer colleges to obtain their business, and creates a national code of conduct.

• Prohibits the Department of Education from establishing a national unit record database, although it does authorize a pilot program for states and consortiums.

• Streamlines the federal student aid application process and asks the Advisory Committee on Student Financial Aid to assess the regulatory burden on colleges and universities.

• Requires institutions to publish their policies on transfer of credit and disclose any plans they have for improving their academic program.

Language offered by Sen. Lamar Alexander (R-Tenn.) struck provisions of the bill that would have imposed rigid measures of student learning through the accreditation system.

A provision offered by Sen. Tom Coburn (R-OK) and amended by language created by Sen. Edward M. Kennedy (D-MA) would ensure that federal grant and student aid funds are not used by colleges to pay any person to lobby a federal agency or Congress.

Other approved amendments include proposals to create a student loan clearinghouse; require teacher-preparation programs to set goals for increasing the number of teachers in math, science and special education; and require the GAO (Government Accountability Office) to study the feasibility of collecting data on the employment of college graduates.

Another controversial amendment offered on peer-to-peer file sharing by Senate Majority Leader Harry Reid (D-NV) was withdrawn. In place of the Reid Amendment, language was inserted by Kennedy into the manager’s package that asks colleges to disclose their policy on copyright infringement to students and make them aware of the consequences of illegal downloading.

The House has yet to act on its version of a Higher Education reauthorization bill. Given that the Senate has now completed its work, the House is expected to unveil a proposal shortly after Congress reconvenes following the August recess.

The College Cost Reduction Act of 2007 Passes House

On Wednesday the House approved H.R. 2669, the College Cost Reduction Act of 2007 with a vote of 273 to 149. The legislation, a budget reconciliation measure, would slash nearly $19 billion in government subsidies to lenders over five years, while increasing grants for needy students and halving interest rates on federally backed loans with the savings.

Terry Hartle, senior vice president for government and public affairs at the American Council on Education said “you are looking at the most substantial changes in the bank-based aid system since it was created in 1965.”

It has been reported that although President Bush opposed some elements of the bill, it is widely expected that a broad overhaul of student aid will become law this year.

In addition, the bill would:

• Make changes to help borrowers who have taken on unmanageable levels of debt.

• Provide tuition assistance to undergraduate students who make a commitment to teach in public schools in high-need subject areas or in underserved communities, and loan forgiveness for students who enter various careers in public service.

• Assign institutions a “college affordability index” based on a comparison of their rate of tuition growth to the Consumer Price Index.

The Senate education committee recently passed its version of the bill along with the Higher Education Act reauthorization, but they await consideration by the full Senate. There are differences between the Senate and House bills and some believe the drafting of an eventual compromise bill between the two chambers could be complicated. The negotiations are scheduled to take place sometime in the fall.

Labor-HHS-Education Spending Bill Passed by House Appropriations Committee

This week the House Appropriations Committee passed the FY 2008 Labor, Health and Human Services and Education Appropriations bill which provides an increase of $390 for the maximum Pell Grant. The Pell Grant spending increase is $2 billion above the 2007 spending level. It is expected that the Labor-HHS-Education bill will be on the House floor for a vote sometime next week.

The National Association of Colleges and Universities (NAICU) has introduced a template that will allow colleges to make data available on areas such as graduation rates, academic programs, student demographics, campus life, admissions and financial aid awards.

The database emerged as a response to calls for transparency in the higher education system by the Department of Education and to provide alternatives to a federally-mandated system that was being considered by the secretary of education’s Commission on the Future of Higher Education.

NAICU hopes the online tool will go live at the start of the coming academic year. The hope is that roughly 500 colleges (about half of NAICU’s membership) will sign on this fall since participation is voluntary.

Appropriations Subcommittee Blocks Accreditation Changes

A House appropriations subcommittee approved a bill that would finance most higher education programs for FY 2008 and would cut off funds for making changes to the accreditation process. The Secretary of Education, Margaret Spellings, has been hoping to make changes to the way colleges are accredited by using the department’s regulatory authority. The vote comes just one week after Senator Lamar Alexander (R-TN) warned in a floor speech that “Congress needs to legislate first. Then the Department can regulate.”

House Education and Labor Committee Passes the College Cost Reduction Act of 2007
On June 13, the House Education and Labor Committee approved the College Cost Reduction Act (H.R. 2669), which would boost college financial aid by about $18 billion over the next five years. The legislation pays for itself by reducing federal subsidies paid to lenders by $19 billion. The bill also includes $750 million in federal budget deficit reduction.

The College Cost Reduction Act would:

• Increase the maximum value of the Pell Grant scholarship by $500 over the next five years, to $5,200 by 2011.

• Cut interest rates in half on need-based student loans to 3.4 percent by 2012-13.

• Raise the amount that working students can earn without reducing their financial aid.

• Provide loan forgiveness to those who enter public service fields or who teach in the nation’s public schools.

• Lift the annual and aggregate limits on how much individual students can borrow from federal loan programs (to help decrease dependency on private loans.)

• Institute a system of “income-based repayment” for borrowers.

The legislation will be taken up next by the full House.

HEA Reauthorization and Budget Reconciliation Passed by the Senate HELP Committee

Senate Democrats introduced a budget reconciliation measure that was approved by the Senate education committee along with the reauthorization of the Higher Education Act that would cut lender subsidies by more than $18 billion while reducing the federal deficit by almost $1 billion and increasing student aid by more than $17 billion. The House approved its budget reconciliation bill (H.R. 2669 – see notes above) a few weeks ago and the chairmen have until September to work out a compromise measure.

Like the House bill, the Senate bill would:

• Forgive the remaining debt of students who work in the public sector or who have been in income-contingent repayment for two decades or more.

• Cap the amount of money that students in income-contingent repayment must pay on their loans.

However, there are significant differences in the Senate and House bills that could complicate conference between the chambers. For example, the House bill provides more aid to low-income students through an increase in the Pell Grant, while the Senate would provide it through new “Promise” Grants to those students who are Pell-eligible.

The reauthorization of the Higher Education Act included a manager’s amendment which softened provisions in the bill that would have increased federal oversight of institutions’ transfer-of-credit policies. In addition, Senator Lamar Alexander (R-TN) was expected to offer an amendment barring the Department of Education from making any changes to the accreditation system, but decided against it because he received a letter from Secretary Spellings assuring him that “she would hit pause and not move ahead until we legislate.”

The bill will also codify many of the reforms on the student loan front championed by New York’s attorney general, Andrew M. Cuomo. Among other changes, the bill will expand eligibility for two new federal grants (Academic Competitiveness and Smart Grants); bar the secretary from establishing a national unit record database of students; and simplify the process of applying for financial aid.

Update on the U.S. Department of Education Accreditation Regulations

The U.S. Department of Education’s negotiated rulemaking sessions on accreditation ended on Friday, June 1. Unfortunately, no consensus was reached, which means that the Department can propose whatever new regulations it may choose. It was reported that the Department’s federal negotiator said it would make every effort to use the input and ideas that were generated from the conversations in the development of the proposed regulations.

The Council of Regional Accrediting Commissions stood firm on the following five (5) principles:

• Any definition of educational outcomes or performance levels should be set by institutions, not by accreditors or the Department of Education.

• Performance should be evaluated by multiple indicators, not by “bright lines” using a single measure.

• Regional accreditation should assess performance at the institutional level, not the programmatic level.

• Comparisons of outcomes should be undertaken by institutions, where appropriate, and should not be mandated by the Department of Education or accreditors.

• Any new regulation should be able to be implemented without significant new burdens on institutions.

The draft regulations will be released in late June, a comment period will follow that will close in September, and final regulations should be published this coming November.

House Votes to Expand Study-Abroad Efforts

The Chronicle of Higher Education reported earlier this week that the U.S. House of Representatives passed a bill that will help to increase the number of American students studying abroad. The Senator Paul Simon Study Abroad Foundation Act (H.R. 1469) sets to create a foundation that would have the goal of sending one million American students abroad each year within the next decade. The bill authorizes Congress to spend $80 million annually on the foundation, which would distribute grants to students through colleges and universities and other study-abroad providers. A Senate version of the bill (S 991), co-sponsored by Sen. Richard Durbin (D-IL), has already been referred to the Committee on Foreign Relations. A similar bill was introduced in the Senate last year and never came up for a vote, but Senator Durbin’s staff said they hoped to see action on S 991 within a few weeks.

The Chronicle also reported that the State Department has proposed a new rule to allow American institutions to sponsor foreign students to work as interns in the U.S. for up to 12 months. The belief is that colleges would support this rule because it would help them to develop exchange programs with foreign institutions. Under the existing regulations, it is difficult for American colleges to sponsor foreign students as interns because there is no provision for that particular purpose. The State Department is accepting public comments on the proposed rule until early August.

Homeland Security Issues Troubling Regulation

The National Association of Independent Colleges and Universities (NAICU) has reported that the Department of Homeland Security recently issued a regulation concerning chemical risk assessment requirements that could have unintended and adverse consequences on colleges and universities. It states that a chemical facility must determine whether it possesses any of 342 listed chemicals – and there is no threshold for 104 of the chemicals. If the facility contains these chemicals, it must complete a more detailed analysis to DHS to assess the relative risk. NAICU said that given the fact that colleges and universities will most likely possess some of the 342 chemicals, they will be subject to this rule, even though they already report hazardous chemicals through the EPA and OSHA. The higher education associations are urging DHS to give special consideration to colleges and universities since “they differ in significant ways” from true chemical facilities. NAICU reports that “so far, DHS has not been sympathetic to that argument.”

Congress Passes Budget Plan

Both Chambers of Congress recently passed the FY 2008 budget resolution (S. Con. Res. 21) which includes $9.5 billion more than the president’s budget for education. It is unclear how that funding will be divided between student aid and K-12 education until the education appropriations subcommittee tackles it this month.

Hearings on Campus Safety

Following the events at Virginia Tech, there was a hearing in the House Education and Labor Committee on best practices in campus security. Both Chairman Miller and Ranking Member McKeon said they would not propose any new federal policy on campus security until they learned of the findings of the independent commission to examine the shootings appointed by Virginia Governor Timothy Kaine. They also made it clear that they are interested in how campuses will increase campus safety through the use of emergency communications technology and making comprehensive mental health services widely available. There was particular focus on the merits of using a threat assessment model on college campuses.

As a result of the Virginia Tech tragedy, hearings have been held in both the House Committee on Homeland Security and the House Committee on Education focusing on the role of the federal government in contributing to safety on college campuses and strengthening community preparedness. More legislative inquiries are expected in the coming months, along with suggestions and recommendations on how to monitor student mental health issues and ensure campus safety.

Another important issue for the higher education community is the investigation into the business practices of the $85 billion student loan industry and the relationships between institutions and student loan lenders. Since New York Attorney General Andrew Cuomo publicly announced an inquiry into the practices of the student loan industry on March 22, it has been reported that the number of investigations has grown to include both the House and Senate education committees and more than a half dozen state attorneys general. Just yesterday, the N.Y. Legislature passed landmark legislation, the Student Lending Accountability, Transparency and Enforcement (SLATE) Act, which codifies Cuomo’s College Loan Code of Conduct and is being endorsed by Congressional leaders as a national model.

Today the House is expected to vote on and pass the Student Loan Sunshine Act (H.R. 890), which is identical to the Senate version of the bill (S. 486) introduced by HELP Committee Chairman Edward Kennedy (D-MA). A press release by the House Committee on Pensions and Labor states “…ongoing investigations into the student loan industry have revealed that egregious conflicts of interests and corrupt practices among lenders, schools, and public officials are undermining the student loan programs that millions of borrowers have come to depend on. Congressional action is urgently needed to return these programs to their rightful owners: students and parents.” The Student Loan Sunshine Act has a number of provisions to “ensure that students and families will encounter a more trustworthy student aid system.” To access the specific provisions of the bill, you can visit: http://edworkforce.house.gov/publications/050807SunshineAct.pdf.

Also making news is the Department of Education’s negotiated rulemaking meetings and how this process will make fundamental changes to the accreditation system. The American Council on Education has stated that such changes would amount to nothing more than “federalizing accreditation.” The peer review model would be replaced with a federal regulatory model, and the Department would dictate new standards and policies that accreditors must apply to institutions. It would also call for a set of federally monitored learning outcomes applied to all institutions and proposals to require accreditors to more strictly monitor institutional policies on transfer of credit. NAICU and other higher education associations are mounting a campaign to protect the current mission-based, peer review model of accreditation. A final hearing of the negotiating committee will be held in a few weeks.

Finally, the House of Representatives continues its work on the reauthorization of the Higher Education Act (HEA). Leaders say they intend to pass the reauthorization bill by the end of September and complete the process by the end of the year. The Senate is not far behind, and says it will hold the markup of its version of the bill sometime this month.

The Maryland General Assembly adjourned sine die at midnight on April 9.

The FY 2008 Operating Budget included full funding for the Sellinger Grant Program. In total, the MICUA member institutions will receive an almost 18 percent increase in state aid over the FY 2007 appropriation. (The Sellinger funds per institution ultimately depend, though, on full-time equivalent enrollment for the Fall of 2006.)

The General Assembly cut the Governor’s allocation for the University of Maryland System and Morgan State University by approximately $2.2 million. The outcome of this is an increase in state aid for public universities of 6.7 percent. In the end, the state’s student financial aid programs saw a decrease of $1.2 million, leaving $110 million in remaining funds.

The four MICUA capital projects totaling $8 million were also approved.

The General Assembly failed to pass any legislation to deal with the state’s future structural budget. It was reported that the Governor plans to balance the budget using the state’s “rainy day” fund to pay for increases in education and health care, but no reserve funds will be available next year to correct the $1.5 billion structural deficit that is projected. Senate President Thomas Mike Miller is reported as saying that he believes next year’s budget will include cuts, tax increases, and slot machine revenues.

For additional information on the top legislative issues affecting independent colleges and universities in Maryland, visit the MICUA web site: http://www.micua.org/legaffairs.htm