Tag Archives: federal

Obama Administration Issues Student Aid Bill of Rights

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This week in Georgia President Obama announced the release of a Student Aid Bill of Rights along with a series of executive actions aimed at helping students who owe student loans held by the government.

The primary components of these actions will be the creation of a centralized complaint system for federal student loan borrowers as well as a single website where they can manage their loan payments.

By next July students and borrowers will be able to file complaints about federal student loan lenders, servicers, collection agencies and colleges and universities.  Through this effort students would have the ability to track what is happening with the status of a complaint and the U.S. Department of Education would have aggregate data to use from the complaint system to make decisions regarding performance of its loan services in addition to current metrics the Department collects. Finally the Department will study how it should collect and resolve complaints it receives about colleges and universities.

In addition, the series of executive actions taken by the President include steps to improve and standardize the customer service experience of federal student loan borrowers. For example the Department will establish a single website where all federal loan borrowers can access their account and payment information.  The Department also plans to direct its contracted loan services to provide enhance disclosures when their loans are transferred between servicers and to more aggressively reach out when borrowers fall behind in their payments or need help changing repayment plans. Finally the Department will instruct loan servicers to apply prepayments  – money a borrower pays in excess of their monthly minimum – to the loans with the highest interest rate, unless the borrower requests otherwise.

Beyond the Department, the U.S. Treasury will look for ways to let borrowers provide multi-year authorization for the IRS to release the income information needed to apply for federal income-based repayment programs.

Finally, the Department will engage a task force to develop regulatory and legislative proposals to help struggling borrowers with both federal and private student loans.  One topic that will be considered is a change to bankruptcy law.

Congress Passes Bipartisan Higher Education Savings Legislation

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Today, the U.S. House of Representatives passed H.R. 529, legislation introduced by Congresswoman Lynn Jenkins (R-KS) and Congressman Ron Kind (D-WI) that would make 529 plans more flexible by making computers an eligible education expense; allowing the redeposit of college refunds without negative tax implications in certain circumstances and updating outdated accounting rules.

Obama Releases FY16 Budget – Focus on Education

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This week President Obama released his FY16 budget.  The budget includes several key investments to support the education continuum by investing in the expansion of high-quality early learning programs, increasing equity and opportunity for all students; supporting teachers and school leaders; and improving access, affordability and student outcomes in college.

The proposed budget includes several investments in higher education:

  • America’s College Promise Initiative, which would partner with state’s to offer free tuition for the first two years of community college ($1.36 billion).
  • Full support for the Pell Grant program, including tying the maximum award to inflation beyond 2017 ($29.7 billion)
  • Simplification of the FAFSA
  • Expansion of job opportunities through the American Technical Training Fund, a joint effort with the Department of Labor ($200 million)
  • Simplification of Income-Driven student loan repayment plans
  • An increase in support for federal TRIO programs by $20 million ($860 million)
  • An increase in support for the First in the World program by $140 million ($200 million)

In addition to higher education, the budget makes several investments in early learning and K-12 education.  Among the highlights is funding to support the Preschool for All program to provide universal high-quality preschool programs for all four year-old from low- and moderate-income families and the Teaching for Tomorrow program to support changes in how states and districts recruit and prepare new teachers and strengthen professional support for teachers throughout their career.

The President’s proposed budget now goes to The Hill for consideration.

Obama Announces Free Community College Proposal

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On Friday, President Obama announced his intent to send legislation to Congress to make the first two years of community college free across the nation – America’s College Promise proposal.

The proposal, a federal-state partnership, would be funded primarily by the federal government (75%) and ask states to fund the remaining (25%). In addition, to qualify students would be required to attend at least half-time, maintain a GPA of at least 2.5, and progress towards their degree.

The proposal asks community colleges to strengthen their programs and increase the number of students who graduate. In particular, to offer academic programs that fully transfer to local public, four-year colleges/universities or occupational training programs with high graduation rates and lead to degrees/certificates that are in high demand by employers.

Finally, states will be required  to invest more in higher education and training by contributing the remaining funds necessary to eliminate community college tuition for eligible students as well as commit to continuing existing investments in higher education, coordinate education to reduce the need for remediation and repeated courses, and allocate a significant portion of funding based on performance not enrollment alone. In return, the federal government will pick-up the majority of the costs but will also provide states with flexibility to use some resources to expand quality community college offerings, improve affordability at four-year public universities, and improve college readiness through outreach and early intervention.

While the proposal would only cover tuition, which is a portion of the entire cost of education, and only pay for two years of college, many students go beyond two years, the White House estimates it would save 9 million students approximately $3,800 per year in tuition if every state chose to participate.
Details are still forthcoming in the President’s 2016 budget, but many questions remain unclear such as how the program would work, how the grants to states would be structured, and how the program would interact with the Pell Grant and other tuition-based financial aid programs.

Some remain cautious of the new program. Some are concerned that this will provide funding to students who can afford tuition. Others argue that tuition is often entirely covered by the Pell Grant for low-income students, but that it is the cost of living and foregone wages, not tuition, that are the biggest financial barriers.

Still the opportunity to change the dialogue around higher education to focus on the possibility for everybody to earn an education is an argument made in favor of the program.

Federal Appropriations for Education Signed Into Law

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Recently President Obama signed into law an omnibus appropriations bill for Fiscal Year 2015. The bill:

  • Provides level-funding for the Department of Education
  • Increases funding to Title I and special education grants to states
  • Funds $250 million towards the Preschool Development Grants program
  • Funds an increase of $100 to the maximum Pell Grant – the new maximum grant is $5,830

In addition the bill makes several cuts. Among the most significant is $21.6 million from the Investing in Innovation Fund and $58.8 million from the Teacher Incentive Fund.

Obama Administration Releases College Ranking Framework

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Today the U.S. Department of Education released the much anticipated framework for a college ranking system.  The framework summarizes the basic categories, institutional groupings, data, metrics, and tools that the Department is currently weighing in designing the ratings system.

The purposes of the rating system are to: (1) help students and families make informed choices when searching for and selecting a college; (2) help colleges measure, benchmark, and continue to improve across the principles of access, affordability, and outcomes; and (3) enable the incentives and accountability structure in the federal student aid program to be properly aligned to these key principles

The first version of the rating system will include four-year institutions and two-year institutions and only take into account undergraduate students.  Graduate-degree only and non-degree granting institutions will not be included.

The rating system will use broad categories to highlight significant success and challenges of institutions. This will not be a numerical ranking of institutions. The ratings will be limited to three performance categories: (1) high-performing, (2) low-performing, and (3) those falling in the middle. The Department argues that this system will allow the identification of institutions that are performing well and those that are facing challenges without suggesting more than the data can support. The Department is currently conducting data analyses to determine the thresholds.

The Department is also interested in the issue of improvement over time. The Department is considering inclusion of some form of recognition that an institution is demonstrating meaningful improvement in partnership with the institution’s ranking.

With regard to institutional groupings, the Department is conducting additional analysis to determine what specific groupings will be used. To date the Department has determined that groupings will differentiate between four-year and two-year and is considering accounting for differences in institutional characteristics such as degree, program mix and selectivity.

The rating system will use existing sources of data for the first version of the rating, including IPEDS and NSLDS as well as individual data such as the FAFSA. The data will inform several metrics used in the rating system. Efforts to measure performance over multiple years and offer intermediate measures are also being considered. Metrics under discussion by the Department include:

  • Percent Pell: The percentage of a college’s enrolled students who receive federal Pell grants
  • Expected Family Contribution (EFC) Gap: The average difference between some focal EFC level and each student’s individual EFC.
  • Family Income Quintiles
  • First-Generation College Status
  • Average Net Price: The cost of attendance after accounting for all federal, state and institutional grant aid
  • Net Price by Quintile
  • Completion Rates
  • Transfer Rates
  • Labor Market Success:  Discussing the use of a combination of a short-term indicator  of “substantial employment” with a longer-term more specific earnings measure such as the mean or median earnings of former students ten years or more after entering the institution. A threshold measure for substantial employment would be a way to express an institution’s share of graduates who earned above a specific level, such as a percentage of former students earning above 200 percent of the federal poverty line for a family of one or a multiple of the full-time minimum wage earned over one year.
  • Graduate School Attendance
  • Loan Performance Outcomes

Finally the Department is also taking into consideration a series of additional issues and how to respond, including how to present the information, account for student and institutional characteristics, make the system consumer friendly, and provide the opportunity for institutions to share additional information.

In the months ahead, the Department will arrange and participate in many structured discussions about the ratings system to continue and focus on identifying, assessing, and refining the best ways to improve access, affordability, and outcomes in higher education. Sessions will be announced by early January.

The agency expects to publish the college ratings system before the 2015-16 school year and will continue to refine the ratings system over time based on user and institutional experience, input from the field, and the availability of additional data.

U.S. House Advances Higher Education Legislation

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This week the U.S. House of Representatives took action on two bills related to the reauthorization of the Higher Education Act.

The Strengthening Transparency in Higher Education Act (HR 4983) eliminates the College Navigator and the accountability lists put forward by the U.S. Department of Education. The website and lists would be replaced by the College Dashboard Website. The new website, developed and maintained by the Department of Education, would include institutional-level information including enrollment data, completion rates, costs, financial aid offered and cohort default rates.

The Advancing Competency-Based Education Demonstration Project Act of 2013 (HR 3136) would relax financial aid rules to allow institutions to offer competency-based degrees. Several amendments were offered and accepted to the Act, including language to pilot the use of the tax return as the FAFSA.

The bills, introduced in June, are part of a series of bills advanced by the House to reauthorize the Higher Education Act. The bills now go to the U.S. Senate for consideration. The fate of the House bills is unknown. The Senate has decided to pursue a comprehensive approach to the reauthorization, instead of the piecemeal approach advanced by the House. Therefore it is unlikely that these bills or any other legislation related to the reauthorization will see any significant movement until the new Congress enters in January 2015.

Lead Democrat Releases Plan for HEA Reauthorization

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On the heels of the Republican release of their proposal to reauthorize the Higher Education Act, the Democrats released a “discussion draft” yesterday.

Senator Tom Harkin (D-IA), Chair of the Senate education committee, released a draft proposal that will remain open for public comment through August 29.  In an outline of the proposal, the Senator put forward the following concepts:

  • Increase affordability and reduce college costs for students by creating a state-federal college affordability partnership to increase state investment in higher education and lower the costs of tuition for students.
  • Reinstate year-round Pell Grants.
  • Eliminate origination fees on federal Direct Loans.
  • Support community college and industry partnerships that promote innovation in higher education.
  • Expand access to dual enrollment and early college high school programs.
  • Strengthen student loan servicing standards through the creation of common-sense consumer protections.
  • Streamline repayment plans to create a single income-based repayment option.
  • Automatically enroll severely delinquent borrowers into income-based repayment.
  • Allow private student loans to be discharged in bankruptcy.
  • Reform abuses in the collections process and reduce unfair fees.
  • Provide student and policymakers with more meaningful disclosures and accountability metrics for institutions, including loan repayment rates.
  • Establish a risk-sharing commission to explore holding low-performing institutions financially responsible for poor student outcomes.
  • Protect taxpayers by changing the 90-10 rule for for-profit institutions to 85-15.
  • Guarantee that federal education dollars are not used on advertising and marketing.
  • Create a student complaint system to better track harmful practices.
  • Authorize several programs to reform and improve teacher and school leader preparation.
  • Provide notification to middle and high school students of their potential eligibility for federal aid.
  • Provide better up-front information and disclosures to prospective students.
  • Standardize the financial aid award letter .
  • Strengthen entrance and exit loan counseling.

 

Higher Education Act Reauthorization Proposals Emerge

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This week the Republicans in the House and Senate released proposals to reauthorize the Higher Education Act.

Senate

Senator Lamar Alexander (R-TN), the Republican  leader on the U.S. Senate education committee unveiled his plan for reauthorization of the Higher Education Act.  Senator Lamar Alexander (R-TN) focused his proposals on changing federal student aid programs.

Alexander’s legislation, which is cosponsored by Senator Michael Bennet (D-CO), would:

  • Eliminate the Free Application for Federal Student Aid (FAFSA). In its replace the legislation would require students and families to provide only their family size and household income. Currently the FAFSA asks more than 100 questions about their finances.
  • Restore year-round eligibility for Pell Grants and provide more flexibility for how Pell Grants are used by students.
  • Streamline federal student aid programs. Among the changes would be the creation of a “one grant and one loan” structure.

House

Representative John Kline (R-MN), the Chair of the U.S. House education committee unveiled his plan for reauthorization of the Higher Education Act.  The House Republican proposal would:

  • Update the Integrated Postsecondary Education Data System (IPEDS) to capture data on non-traditional students.
  • Streamline information to students with a focus on greater coordination among federal agencies to avoid duplication and increase transparency.
  • Enhance financial literacy.
  • Prevent the implementation of a federal government rating system of colleges and universities.
  • Streamline federal student aid programs by creating a one grant, one loan and one work-study program.
  • Streamline repayment options for students, creating a two options a standard repayment plan and a modified income-based repayment plan.
  • Create the  “Flex Pell Grant” which would allow a student to learn of the amount of Pell funds he/she is eligible to receive over a six year period and then be able to draw funds as needed until the student either completes an academic program or exhausts the allocated funds.
  • Ensure the long-term stability of the Pell Grant program.
  • Encourage online learning by minimizing laws and federal regulation barriers.
  • Create a competency-based education demonstration project to allow institutions to explore new ways of providing education to students and require evaluations of these programs.
  • Support at-risk and minority students through reforms to improve college access programs and maintain vital institutional aid programs.
  • Eliminate overly burdensome federal regulations.
  • Strengthen teacher preparation programs by streamlining existing federal programs, reforming reporting requirements, and facilitating partnerships between school districts and institutions of higher education to reform preparation and better connect pre-service training to in-service practice.
  • Rebalance the responsibility for program integrity by recognizing the important role of the accreditation.

Senator Tom Harkin (D-IA), Chair of the education committee, is expected to release his proposal later this week.