Monthly Archives: July 2013

U.S. Senate Passes Student Loan Legislation

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Yesterday the  U.S. Senate approved legislation to link interest rates on student loans to the market, which would cut rates in the short term but potentially allow them to rise significantly within a few years.

The vote was 81 to 18.  All but one of the Senate’s “no” votes were from Democrats, Republican Mike Lee of Utah was the one “no” from his party. Many of the Democrats voted for an alternative pushed by Sens. Elizabeth Warren and Jack Reed and another proposal that would have sunsetted the proposal before rates were likely to spike.

But with supportive statements issued within minutes of the Senate vote by leading House Republicans  and Rep. George Miller, the senior Democrat on the House education panel, the measure seems sure to pass the House. The White House signaled President Obama’s support early Wednesday, virtually ensuring that it will become law.

Under the legislation, student loan rates would reset each July based on the previous May’s auction of 10-year Treasury bills. Undergraduate loans — those that are federally subsidized as well as those that are not — would be set at the Treasury rate plus 2.05 percentage points, while loans for graduate students would be set at 3.6 points above the Treasury rate, and loans for parents at 4.6 percentage points over the T-bill rate. The maximum rate would be capped at 8.25 percent for undergraduate loans, 9.5 percent for graduate student loans, and 10.5 percent for parent loans.

Because the Treasury rate is low now, the rate on undergraduate loans in the 2014 fiscal year would be 3.86 percent (5.41 percent for graduate students, and 6.41 percent for parents) — well below the 6.8 percent rate that took effect July 1.

Obama to Launch New Aggressive Reform Agenda for Higher Education

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Yesterday in a speech at Knox College in Illinois, President Obama promised to unveil a plan to promote significant reform in higher education. The crux of the plan seems to focus on controlling what colleges charge students.

“[I]n the coming months, I will lay out an aggressive strategy to shake up the system, tackle rising costs, and improve value for middle-class students and their families. It is critical that we make sure that college is affordable for every single American who’s willing to work for it,” said Obama.

“Families and taxpayers can’t just keep paying more and more and more into an undisciplined system where costs just keep on going up and up and up. We’ll never have enough loan money, we’ll never have enough grant money, to keep up with costs that are going up 5, 6, 7 percent a year. We’ve got to get more out of what we pay for,” Obama said.

“Now, some colleges are testing new approaches to shorten the path to a degree, or blending teaching with online learning to help students master material and earn credits in less time.  In some states, they’re testing new ways to fund college based not just on how many students enroll, but how many of them graduate, how well did they do,” he said. “And in the coming months, I will lay out an aggressive strategy to shake up the system, tackle rising costs, and improve value for middle-class students and their families.  It is critical that we make sure that college is affordable for every single American who’s willing to work for it.”

Governor Announces New Accountability Framework for All of State Government

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Last week Governor Inslee announced the preview of a new accountability framework for state government in Washington.  The new approach “Results Washington” is based in the Lean method pioneered by Toyota car factories and used by Boeing.

The mission statement in progress states that the intention of the new framework is “To build a thriving Washington by fostering the spirit of continuous improvement, enhancing the conditions for job creation, preparing students for the future and valuing our environment, our health and our people.”

Results Washington is still a month away from a formal roll out, but a preview of the framework was provided by Inslee’s Chief of Staff Mary Alice Heuschel at an event on government management and efficiency.

Though similar to Governor Gregoire’s Government Management Accountability Program (GMAP) which also was based on the Lean method, Results Washington is expected to be broader encompassing all of state government.

The framework will focus on five goals:

  • A world class education system from preschool through college
  • A prosperous economy
  • Making Washington a national leader in sustainable energy and a clean environment
  • Health and safe communities
  • Efficient, effective and accountable government. This is an overarching goal over the four goals previously listed.

Each goal will be organized as SMART- Specific, Measureable, Attainable, Relevant, and Time-bound.

In the next month the Governor’s Office will be working to finalize the main goals and develop targets that agencies will aim to reach. There is expected to be three phases and a system of “leading indicators” to show progress. The indicators will cut across agency boundaries and results will be made public on a single website.

Student Achievement Council Selects New Officers

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The Washington Student Achievement Council recently selected new leadership.

Maud Daudon and Karen Lee, as selected by the members of the Council, will serve as Chair and Vice Chair of the Council.

Ray Lawton will remain in his position as Secretary for the Council.

Maud Daudon and Karen Lee are both citizen members of the Council, serving at the request of Governor Jay Inslee. Ray Lawton is the appointed representative for the Independent Colleges of Washington.

Elections for these positions occur annually, and all three members will serve one-year terms.

The Latest from D.C.

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In the last two days of this week progress appeared to slow down on two critical fronts in the U.S. Senate.

First, the tentative bipartisan agreement reached earlier this week with regard to student loan interest rates was significantly weakened after the Congressional Budget Office estimated the agreement’s costs at $22 billion over the next decade. The higher-than-expected cost estimate, which would make the loans unprofitable for the government, threatens the deal.

Second, the full U.S. Senate appropriations committee passed a 2014 spending bill that largely mirrored the funding levels for education proposed by the subcommittee earlier this week.  The largest difference in the bill that was passed out of the full committee was a reduction in the funds allocated to the Race to the Top program for college affordability. The bill passed out of committee reduces the funding levels from $400 million to $150 million.
Funding for other education and research programs stayed the same in the full committee’s version of the bill. The bill allocates $850 million for the TRIO programs, which help low-income, first-generation college students prepare for postsecondary education.  Under the bill, the total maximum Pell Grant would rise by $140 to $5,785.

Bipartisan Senate Agreement on Student Loans Reached

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This week the debate on student loan interest rates experienced a step forward. A bipartisan group of senators reached a deal on a long-term change to interest rates for all new federal student loans.

This agreement comes after interest rates on some loans doubled last week. Federally subsidized student loans increased to 6.8 percent from 3.4 percent

The agreement would tie the interest rate on new student loans to market conditions. Rates, based on the yield on 10-year Treasury bills, would vary from year to year, but be fixed over the life of the loan. Rates would be capped so they couldn’t rise indefinitely if interest rates spike: undergraduate loans would be capped at 8.25 percent, and graduate loans at 9.25 percent. Finally, the compromise would be retroactive, so students taking out loans after July 1 would get the new interest rate.

Final details on the interest rate are awaiting a score from the Congressional Budget Office this week. But the bipartisan group agreed that all undergraduate loans would be set at the 10-year Treasury yield plus 1.8 percentage points. For graduate loans, the rate would be the 10-year yield plus 3.4 percent; for Parent PLUS loans, the 10-year yield plus 4.5 percent.

If rates were based on Wednesday’s Treasury yield, undergraduate loans issued today would have an interest rate of 4.5 percent; graduate loans, 6.1 percent; and PLUS loans, 7.2 percent. All are lower than the rates for those loans under current law.

Setting a single rate for all undergraduate loans means that subsidized loans, which go to students determined to have financial need, would no longer have lower rates than unsubsidized loans, which are available to all undergraduates regardless of need. From 2007 until last week, subsidized loans had lower interest rates. The rate for unsubsidized loans has been 6.8 percent.

If the plan passes the Senate, the House of Representatives is likely to follow suit. A vote on the measure has not yet been scheduled.

Developments from the Other Washington

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This week in the other Washington higher education was on the mind of policymakers.

In the U.S. House, the Committee on Education and the Workforce held a hearing on innovation in higher education. Among the topics of most interest to members was the area of competency-based education and prior learning assessment.  Speakers included representatives from the Council on Adult and Experiential Learning, StraighterLine, the University System of Maryland, and Western Governors University.

On the other side of the Capitol, the U.S. Senate Appropriations Subcommittee on Labor Health and Human Services and Education approved a FY14 appropriations bill.

Among the major investments in the bill are funds to support a “Race to the Top” program focusing on college affordability and  a significant increase in funding for the National Institutes of Health.

The bill sets discretionary spending at $164.3 billion. This includes $400 million to support the Obama administration’s “Race to the Top” initiative.  The funding for the program will be an incentive for states to reduce college costs and improve academic outcomes. The subcommittee would also allocate $850 million for the TRIO programs, which help low-income, first generation college students prepare for and succeed in postsecondary education.  Finally, the bill would increase the total maximum Pell Grant by $140 to $5,785.

The House has not yet introduced its version of the appropriations bill. It is considered unlikely that the two bills will be reconciled and passed. The full appropriations committee will meet later this week.

Governor Inslee Signs Biennial Capital Budget

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This afternoon Governor Inslee signed into law the 2013-15 biennial capital budget (SB 5035) with a single veto.

The Governor vetoed language that would require the Superintendent of Public Instruction to create an interagency agreement with Evergreen’s Washington State Institute for Public Policy to analyze the relationship between school design and student performance and to develop recommendations for the school construction assistance program.

The language was vetoed based on the reasoning that it was deemed overly broad and an unnecessary expense.

The biennial capital budget signed by the Governor provides $15.280 million for Evergreen’s capital program.

Over the next biennium Evergreen receives funding for three projects: (1) Science Lab I – Basement Renovation ($1.805 million), (2) Science Lab II – Second Floor Renovation ($4.694 million), and (3) Lecture Hall Renovation – Design ($1.308 million).

In addition the budget includes funding for minor works preservation and preventative maintenance.

Governor Signs Operating Budget

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On Sunday Governor Inslee signed into law the 2013-15 biennial operating budget with a modest list of vetoes.

Among the items the Governor vetoed were three studies directed to the Washington State Institute for Public Policy, an Evergreen public service center.  These include:

  • Extraordinary Foster Care Cost Study based on the reasoning that a study is not necessary at this time.
  • Safety Assessment Tool Study based on the reasoning that a study at this time would be premature when the Department of Social and Health Services has not yet determined whether the assessment tool will continue to be used, modified, or maintained.
  • K-12 Funding Task Force based on the reasoning that another task force is duplicative of proposals from recent work groups.

The legislatively passed operating budget makes the strongest investment in higher education in years. The proposed budget assumes no increases in resident undergraduate tuition rates for the 2013-15 biennium. For 2013-14 the public, four-year institutions are prohibited from using tuition-setting authority to exceed the appropriated tuition level.

The total budget provides $3.1 billion in state funds to support higher education. The budget provides $119.3 million in funding to support the core academic functions of the institutions of higher education. Finally the budget makes an investment in financial aid including the College Bound Scholarship program and the State Need Grant.