Tag Archives: federal

Obama Focuses on Higher Education in State of the Union

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Last night President Obama delivered his 2012 State of the Union address to Congress and the Country.

In his speech, the President emphasized college affordability and job-training as a central tenant in his plan to improve the economy, proposing that Congress penalize institutions for increasing tuition rates, stop student loan interest rates from doubling in July 2012 and extend education tax cuts.

The Presidents comments on higher education derive from the release of the President’s  “Blueprint for an America Built to Last“.

Obama states in the Blueprint that  “College costs are escalating at an unsustainable pace. Even after adjusting for inflationaverage published cost of tuition and fees at a four-year public university has increased by 136% in the last 20 years. This Administration has made college more affordable by continuing to increase the maximum Pell Grant award by more than $800 and creating the American Opportunity Tax Credit worth up to $10,000 over four years of college.”

To keep college affordable, Obama called on Congress to do the following:   

  • Keep tuition from spiraling too high: The President is proposing to shift some Federal aid away from colleges that don’t keep net tuition down and provide good value
  • Preventing student loan interest rates from doubling: The President called on Congress to stop the interest rate on subsidized Stafford student loans from doubling on July 1 of this year, so young people don’t have as much debt to repay.
  • Doubling the number of work-study jobs: The President wants to reward students who are willing to work hard by doubling over five years the number of work-study jobs for college students who agree to work their way through school.
  • Permanently extending tuition tax breaks that provide up to $10,000 for four years of college: The President is proposing to make the American Opportunity Tax Credit permanent, maintaining a tax cut that provides up to $10,000 for tuition over four years of college.

In addition, Obama’s Blueprint calls for a new competitive program that will challenge states and districts to work with their teachers and unions to comprehensively reform the teaching profession by:

  • Reforming colleges of education and making these schools more selective;
  • Creating new career ladders for teachers to become more effective, and ensuring that earnings are tied more closely to performance;
  • Establishing more leadership roles and responsibilities for teachers in running schools; improving professional development and time for collaboration among teachers; and providing greater individual and collective autonomy in the classroom in exchange for greater accountability;
  • Creating evaluation systems based on multiple measures, rather than just test scores;
  • Re-shaping tenure to raise the bar, protect good teachers, and promote accountability.

Overview of U.S. Department of Education 2011-12 Federal Budget

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At the end of December 2011 President Obama signed into law the 2011-12 federal education budget. The budget provides funding for the U.S. Department of Education and education programs from October 1, 2011 to September 30, 2012.

The budget provides $68.3 billion in discretionary spending to the U.S. Department of Education. This represents a 1.4% decrease from last year. Part of the federal budget negotiations included a required reduction of 0.189% across-the-board.

Multiple key programs are funded at similar funding levels to last year.  However some key programs saw declines in their funding levels.

  • The Pell Grant program received a slight reduction of 0.58% with a maximum annual level of per student funding set at $5,550. A limit was placed on the number of full-time Pell grants any individual student may receive in a lifetime to a maximum of six years/12 semesters and requires that students have either received a high school diploma or GED, or have been homeschooled in order to be eligible.
  • The Race to the Top program saw a reduction of 21% from $699 million to $549 million. The budget legislation requires the program to include a robust early childhood education component this year.

 

Congress Reaches Pell Agreement

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Late this week  Congressional leaders reached agreement on an omnibus spending bill (H.R. 3671) that contains the nine remaining spending bills for 2012.

As a part of this package Congress agreed to maintain the maximum Pell Grant at $5,550. To pay for the Pell Grant program the bill tightens eligibility for grants and temporarily ends the interest subsidy on undergraduate student loans during the six-month grace period after a student graduates.

With regard to eligibility changes, under the bill, students would be limited to six years of Pell Grants, rather than the current nine. It remains unclear whether or not students who have already received at least six years of the grants would remain eligible for additional aid. In addition students who lack high-school diplomas or GED’s would no longer be allowed to qualify for the grants by taking an “ability to benefit” test.  Finally the bill would reduce the number of students who automatically qualify for the maximum Pell Grant by lowering the income cap for receiving an “automatic zero” expected family contribution from $30,000 to $23,000.

In addition to the changes to the Pell Grant program the bill impacts several other higher education related programs. Among the impacts are:

  • Increased funding for the National Institutes of Health by 1 percent;
  • Allowing the National Institutes of Health to go ahead with plans to create a new center to help pharmaceutical companies make drugs from universities’ research discoveries;
  • Providing flat funding for most student-aid programs, including the Supplemental Education Opportunity Grants and Federal Work-Study, and the Gear Up college-preparation programs; and
  • Increasing funding for TRIO college-prep programs by $15 million.

Votes on the budget are expected today in both the U.S. House and Senate. The latest continuing resolution experies today and if lawmakers do not pass the spending bill or another stopgap resolution by then much of the federal government could shut down.

 

President Obama Invites Higher Education Leaders to White House

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On Monday in a private meeting President Obama and U.S. Secretary of Education Arne Duncan met with a dozen higher education presidents and representatives from the Lumina Foundation and the Delta Project to discuss affordability and productivity in higher education.

The majority of presidents in attendance were from public institutions and represented institutions that had done something about reducing spending or improving student learning. Among the institutions represented included the Western Governors University, Berea College, and Carnegie Mellon University.

The group discussed how to curb the rising cost of college and improve graduation rates. Reports suggest that the conversation focused on how to drive down tuition, how to improve affordability and graduation rates through innovation, and the right role of the federal government in meeting these goals.

Updates at the Federal Level

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Higher education saw action by the White House, Congress, and the U.S. Department of Education last week.

White House

The White House announced that President Obama had extended an invitation to presidents of ten colleges and unviersities to the White House to discuss affordability and productivity in higher education. Though a list of the presidents invited was not released the invitation to the meeting suggests the focus will be on increasing access and success as well as how to make higher education more affordable. Specifically presidents will be asked for their perspectives on increasing productivity, access and attainment, as well as how to create change at higher education institutions.

The meeting will take place on December 5 and will take the form of a roundtable discussion with President Obama, Education Secretary Arne Duncan, White House advisers, and “thought leaders” in higher education.

Congress

Last week the U.S. House Subcommittee on Higher Education and Workforce Training held a hearing on the cost of higher education. The focus was what colleges and universities are currently doing, and what they can do, to make college more affordable for students and families.

Several experts appeared before the Subcommittee to discuss current initiatives to hold down the cost of higehr education, including Jane Wellman, founder and executive director of the Delta Project, Ronald Manahan, President of Grace College & Seminary, Jamie Merisotis, President of the Lumina Foundation, and Tim Foster, President of Colorado Mesa University.

U.S. Department of Education

Before a Federal Student Aid conference last week, U.S. Secretary of Education Arne Duncan focused on college costs. Duncan expressed concerns about the rising prices of higher education and called on the higher education community to “think more creatively and with much greater urgency” about college costs.

In addition he identified several plans for higher education. Among the changes he proposed include replacing the expiring Perkins Loan program with campus-based loans awarded in part on Pell Grant recipient graduation rates; incentive grants rewarding states and institutions for increasing completion rates and closing achievement gaps; and a fund to support innovative programs that hold down tuition.

On a different note the U.S. Department of Education also issued a final rule that will make it easier for states to track students’ academic progress and evaluate education programs. The rule will expand the aiblity of state and local education officials to share student information more widely without violating federal privacy laws. In addition the rule also makes lenders, guarantors, and other agencies with access to student records subject to the law known as FERPA.

Lack of Agreement of Debt Committee Triggers Cuts to Education

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Yesterday the deadline to reach an agreement on deficit reduction passed. The Congressional Deficit Committee announced that they were unable to reach an agreement. As a result, this set into motion $1.2 trillion in automatic spending cuts over the next decade if Congress does not act by 2013 on the deficit.  

The impact to education is likely to be hard. The U.S. Department of Education’s budget would be reduced by $3.54 billion in 2013. In addition $134 million for non-Pell Grant financial aid programs will likely be lost.

While the Pell Grant is exempt from cuts in the current fiscal year they remain at risk. The overall spending caps that will be enacted by Congress will place constraints on the federal budget and make it difficult to maintain support for current funding levels.

The 12-member Joint Select Committee on Deficit Reduction, formed in the July compromise that increased the nation’s debt limit, was charged with cutting $1.2 trillion from the deficit before Thanksgiving.

Congress still has a year to decide how to apply the $1.2 trillion in cuts – to be split evenly between defense and nondefense spending.  In the meantime it is possible that Congress could reach a long-term agreement on deficit reduction or change how the mandated cuts are enacted. Though President Obama has vowed to veto any legislation that would eliminate the automatic cuts.

The budget conversation will now shift back to the congressional appropriation committees to decide on several budget bills and enact 2013 spending caps.

Obama Accelerates Relief for Student Borrowers

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On Wednesday President Obama announced new executive actions to lower student loan payments for federal student loans. These changes do not include private student loans.

The initiative accelerates an income-based repayment plan that reduces the maximum required payment on student loans to 10 percent of annual income. The measure was suppose to go into effect in 2014.

In addition the Obama Administration announced a program to allow borrowers to consolidate their loans and get a lower interest rate.

Pell Grant: U.S. House and Senate Proposals

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The U.S. Congress is still working to finalize funding for fiscal year 2012, despite the fact that the fiscal year began on October 1.  In the meantime Congress has passed a continuing resolution to keep agencies and programs operating at fiscal year 2011 levels until a FY12 budget is passed, which is expected later this year.

Since 2009 Congress has provided new rounds of ad-hoc funding to maintain the increased maximum grant level established in the American Recovery and Reinvestment Act of 2009.  The new grant level continues to be a challenge for Congress. Since 2009 Congress has supported the increase in the grant through various efforts including:

  • Elimination of the guaranteed student loan program (2010)
  • Elimination of the “year-round” Pell Grant (2011)
  • Elimination of the interest-free benefit on subsidized federal loans for graduate students (2011)

In order for Congress to maintain the current maximum Pell Grant ($5,550 per year) it must appropriate $24.3 billion for FY12. This is an increase of $1.3 billion from FY11.

An examination of the House and Senate proposals (i.e. the release of the Labor-HHS-Education appropriation bills) shows the multiple ways each chamber is attempting to reach the fiscal target to maintain the Pell Grant. The different approaches leave room for a compromise in a final omnibus appropriations bill.

U.S. Senate

The U.S. Senate’s proposed appropration bill (S. 1599) would appropriate the full $24.3 billion to maintain the maximum grant in the 2012-13 academic year. The funding is offset by eliminating the interest-free benefit on Subsidized Stafford loans during an undergraduate borrower’s six-month grace period after leaving school. This would create savings of $1 billion which is allocated to support the 2013 Pell Grant and another $3.5 billion for the program between 2017-2021.

U.S. House

The U.S. House’s appropration bill does not add funding to the Pell grant and actually cuts funding when compared to FY11. The caveat being that the bill would still maintain the maximum grant of $5,550 in the 2012-13 academic year. The bill maintains the maximum grant by making significant changes to Pell Grant eligibility rules. These changes include:

  • Reducing he maximum number of semesters a student can receive a Pell Grant from 18 to 12
  • Eliminating eligibility for students that are attending school less than half-time
  • Reducing the amount of a student’s personal earnings that can be excluded from a Pell Grant award calculation
  • Reducing the maximum family income that would automatically qualify a student for the maximum grant from $30,000 to $15,000.
  • Eliminate eligibility for students who quality for less than 10% of the maximum grant.

These changes would lower the appropraiton needed to fund a maximum grant of $5,550 by $3.6 billion in 2012 and about $4 billion each year thereafter because fewer students would be eligible for grants and some students would receive smaller grants.

U.S. House Releases Education Appropriations Bill

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Today the U.S. House Appropriations Committee their  draft fiscal year 2012 Labor, Health and Human Services (LHHS) funding bill. The legislation includes funding for programs within the Department of Labor, the Department of Health and Human Services, the Department of Education, and other related agencies.

In total, the draft bill includes $153.4 billion in discretionary funding, which is $4 billion (-2.5%) below the fiscal year 2011 enacted level and $27.5 billion (-15.2%) below the President’s budget request. The funding levels reflect the overall change in fiscal year 2012 discretionary spending to $1.043 trillion – the amount to which the House, Senate, and White House agreed in the recent debt ceiling legislation.

The Department of Education is funded at $69 billion in the legislation, which is $2.4 billion (-3%) below last year’s level and $11.5 billion (-14%) below the budget request. The bill eliminates more than 30 programs that are duplicative, inefficient, or unauthorized, including the Administration’s “Race to the Top” program.

  • Title I Program – These basic grants to local school districts that help all children become proficient in reading and math are funded at $15.5 billion, which is $1 billion above last year’s level.
  • Pell Grants– The maximum Pell Grant award is continued at $5,550. In addition, the bill includes reforms to the program to reduce costs by $3.6 billion in the next year alone. These reforms include: limiting the lifetime eligibility for Pell Grants to 6 years (down from 9 years); rolling back recent and unnecessary changes to the qualification formula; eliminating eligibility for students who attend school less than half time or students who do not have a high school diploma or GED; and better targeting the funding to the neediest students.
  • Special Education – Special Education grants to states are funded at $12.7 billion in the legislation – an increase of $1.2 billion above last year’s level. This will raise the federal percentage of special education funding from 16.1% to 17.3%, allowing states and communities to better fund required special education services.

A subcommittee mark up of the draft LHHS bill released today has not yet been rescheduled.

U.S. Senate Panel Approves Funding Bill for Higher Education

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Last week the U.S. Senate’s Subcommittee on Labor, Health and Human Services, Education & Related Agencies approved a spending bill for higher education and research.

The bill makes several reductions to higher education and research. Among the reductions is $190 million in FY12 to the National Institutes of Health and the elimination of the National Center for Research Resources.

The bill does provide sufficient funding to maintain the maximum Pell Grant award of $5,550. To fund the Pell Grant the Senate proposes ending the interest subsidy on undergraduate student loans during the six-month grace period after a student graduates. The end of the interest subsidy is another impact to student borrower  benefits. In July Congress voted to end the in-school interest subsidy on federal loans to graduate students and eliminate the interest-rate reduction for on-time loan repayment for all borrowers as part of an effort to close the shortfall in the Pell program.

In addition to the Pell funding the Senate would provide same level support for Federal Work Study and the Supplemental Educational Opportunity Grant as in 2011. Finally the Senate provides $20 million for a new program to speed the translation of basic reserach into treatments and cures.

The full Senate Appropriations Committee is expected to consider the bill this week. It is unclear as to the fate of the bill beyond this step. The U.S. House has indicated that they will not take up the Senate’s version of the bill and word on the street is that it is unlikely Congres will pass a stand-alone spending measure for education and research. Instead Congress is expected to pass one or more continuing resolutions financing programs at the 2011 levels and eventually consolidating the bills into a single omnibus spending bill later this year.