Tag Archives: federal

Federal Financial Aid Bill May Be Lighter in Content

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What does federal health care legislation have to do with student financial aid legislation? Quite alot in Washington D.C.

Though it remains far from certain, though the odds are increasing, Congress continues to consider merging the Student Aid and Fiscal Responsibility Act (SAFRA) (H.R. 3221) into the health care legislation. 

The practice of budget reconciliation which has become synonymous with passing federal health care legislation can only be used once per budget cycle.  Budget reconciliation allows policymakers to pass legislation with only a majority of lawmakers instead of the 60 votes required under the regular Senate rules.  Though 50 is still a majority vote in Congress, in the Senate it takes 60 votes to avoid a filibuster a tactic that policymakers can use to disallow a bill to go to the floor for a straight up and down vote.

To make a long story a bit shorter, Congress cannot use budget reconciliation both to pass health care legislation and student financial aid legislation, a tactic which seems necessary for both because of the contentious policies included in both bills.

In the last few days the student financial aid bill (SAFRA) has become lighter in content so as to not discourage policymakers from supporting the health care legislation.  How a stripped-down student financial aid bill would look if passed has become clearer over this time.

  • The bill would fall short of the Obama admininstration’s original proposal to transform the student aid programs.
  • Pell Grants would remain the legislation’s top priority, though because of the program’s rapidly escalating costs, the value of the maximum grant would rise less than originally planned.
  • Community colleges would get little or none of the nearly $10 million they would have been slated to receive.
  • Historically black, hispanic, and otehr colleges would likely benefit
  • Some of the savings from the loan overhaul may be used to help pay for health care reform.

More specifically, several cuts have been made to ensure that the costs of SAFRA are under the $61 billion over 10 years ceiling budget.

  • $8 billion for early childhood education
  • $4 billion for school modernization
  • $12 billion over 10 years for the American Graduation Initiative, grant and construction funds for community colleges.
  • No plan to revamp Perkins Loan program.
  • While a majority of funding will go to Pell, the bill removes the idea of adding 1% point to increase the grant annually and reduce the maximum grant to $6,400 by 2019 rather than $6,800.

So what happend? A lot.

Sen. Conrad (ND-D), Chair Senate Budget Committee, decided to use the more recent and lower estimate provide by the Congressional Budget Office (CBO) ($67 billion). The Obama Administration had counted on generating $87 billion in revenue over 10 years by switching to direct lending. 

The Administration had won support for this controversial move to direct lending by planning to spread the expected savings to a wide range of priorities including boosting funds for the Pell Grant and establishing it as an entitlement; creating a new grant program for community colleges; expanding and remaking the Perkins Loan Program, and creating a new $3 billion Access and Completion Fund to reward states and institutions that found ways to increase degree production.

However since the release of the Obama Administration’s proposal many institutions have self-selected to move to the direct loan program which reduced the potential savings planned by the Administraiton to support other education initiatives.

At the same time the number of students eligible for the Pell Grant dramatically increased the projected costs of the administration’s plan to increase the maximum Pell Grant award and tie future increases to the Consumer Price Index plus 1%.  These developments have also created a massive shortfall in the Pell Grant program (approx. $19 billion) that Congress must find a way to cover.

In addition, last spring Congress passed a budget resolution that the health care legislation reduce the deficit. There is concern that on its own, health care legislation cannot produce enough bugetary savings to meet this requirement. So a major element for Democrats to incorporate the student loan provisions into the health legislation is the fact that they could use some of the billions generated by the loan changes to meet deficit reduction requirements.  As a result even less money is likely to be available for students and colleges should SAFRA pass.

So what is next. The CBO will release a revised accounting of the budget bill early this week to make clear the exact cost and savings of the legislation.

Federal Policy Focuses on Financial Aid

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In the other Washington (i.e. Washington D.C.) efforts to move legislation that directly impacts higher education (i.e. financial aid) received a much needed push by the White House.

Yesterday morning, the Secretary of Education Arne Duncan testified before the House Budget Committee urging Congress to support the President’s FY11 budget, which assumes passage of the Student Aid and Fiscal Responsibility Act (SAFRA) (H.R. 3221).

SAFRA increases funding for the Pell Grant program and creates low-cost student loans among other things. SAFRA is now in the U.S. Senate has been referred to referred to the Senate Committee on Health, Education, Labor, and Pensions.

Also yesterday morning the Senate passed the first of what is to be expected multiple job bills. While higher education advocates have and continue to lobby for an additional $300 million for the Federal Work-Study (FWS) program, these additional funds were not included in the $15 billion Senate bill passed yesterday.

The additional $300 million comes from the U.S. House of Representatives’ jobs package bill. The $154 billion package, passed in December, included these funds for the FWS program. The additional $300 million would keep funding level with this year’s ARRA-supplemented (stimulus dollars) appropriation.

While higher education lobbyists will continue to advocate for these additional dollars the next step in the process is unclear.

The Senate is expected to pass multiple bills as a part of their job-creation initiative to make passage easier. The more narrow a bill the better the passage is the thinking behind this strategy.

The House is also strategizing whether or not to try and reconcile their bill with the Senate bill or simply start over.

Obama Releases Proposed 2011 Budget – Education Focus

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Early this week President Obama released his proposed budget for 2011. The proposed budget makes a strong statement about the importance of investing in higher education.

The 2011 fiscal year budget request seeks to increase discretionary education spending by $4.5 billion to $50.7 billion and implements many of the student aid changes proposed in the 2010 budget.

The budget:

– Makes Pell Grants an entitlement by funding it entirely with mandatory funds.

– Increases the maximum Pell award by $160 to $5,710 in 2011. After 2011, the maximum award would increase annually by the rate of inflation plus 1 percent.

– Eliminates the Federal Family Education Loan Program (FFELP) and originates all federal student loans through the Direct Loan Program.

– Expands and redesigns the Perkins Loan Program.

– Funds, over seven years, a College Access and Completion Fund to support innovative strategies to increase the number and percentage of students entering and completing college.

– Invests funds over 10 years for the American Graduation Initiative to invest in promising reforms to raise graduation rates.

– Expands over 10 years income-based repayment.

– Funds over 10 years the American Opportunity Tax Credit to make it permanent.

– Provides level funding for Federal Work-Study, Supplemental Educational Opporuntity Grants, the Federal TRIO Program, and GEAR UP.

– Eliminates funding for the Leveraging Educational Assistance Partnerships (LEAP).

– Eliminates funding for the Byrd Honors Scholarship.

– Allows for the expiration of the Academic Competitiveness Grant (ACG) and the National SMART Grant.

– Eliminates the Department of Labor’s Career Pathways Innovation Fund.

– Reduces the budget of the National Endowment for the Humanities.

– Increases funding for several key scientific research agencies for job creation purposes.

– Increases financial support for the AmeriCorps national service program.

State of the Union – Education Focus

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On Wednesday evening, President Obama gave the first State of the Union address of his presidency. The address focused on issues ranging from health care to green jobs to education.

Below are some of the excerpts from President Obama’s speech in which education was the focus:

…we need to invest in the skills and education of our people.

Now, this year, we’ve broken through the stalemate between left and right by launching a national competition to improve our schools. And the idea here is simple: Instead of rewarding failure, we only reward success. Instead of funding the status quo, we only invest in reform — reform that raises student achievement; inspires students to excel in math and science; and turns around failing schools that steal the future of too many young Americans, from rural communities to the inner city. In the 21st century, the best anti-poverty program around is a world-class education. And in this country, the success of our children cannot depend more on where they live than on their potential.

When we renew the Elementary and Secondary Education Act, we will work with Congress to expand these reforms to all 50 states. Still, in this economy, a high school diploma no longer guarantees a good job. That’s why I urge the Senate to follow the House and pass a bill that will revitalize our community colleges, which are a career pathway to the children of so many working families.

To make college more affordable, this bill will finally end the unwarranted taxpayer subsidies that go to banks for student loans. Instead, let’s take that money and give families a $10,000 tax credit for four years of college and increase Pell Grants. And let’s tell another one million students that when they graduate, they will be required to pay only 10 percent of their income on student loans, and all of their debt will be forgiven after 20 years –- and forgiven after 10 years if they choose a career in public service, because in the United States of America, no one should go broke because they chose to go to college.

And by the way, it’s time for colleges and universities to get serious about cutting their own costs -– because they, too, have a responsibility to help solve this problem.

Now, the price of college tuition is just one of the burdens facing the middle class. That’s why last year I asked Vice President Biden to chair a task force on middle-class families.