Tag Archives: Financial aid policy

Federal Funding Legislation for Current Year Would Impact Higher Education

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Last Friday the U.S. House and Senate along with the White House agreed to a long-term continuing resolution that would fund the federal government for the remainder of FY 2011.  The deal reduces federal spending by $38.8 billion.

Congress also passed a short-term budget gap bill that expires this Thursday which will allow for time to develop the full legislation needed to implement the agreement. The short-term budget gap bills includes $2 billion in reductions.

The budget deal preserves the maximum Pell Grant but ends year-round Pell grants (See summaries posted by the House and Senate Appropriations Committees). In addition, the budget makes reductions to several research and education programs.   The bill would eliminate the Byrd Honors Scholarship Program and the Leveraging Educational Assistance Partnership (LEAP) program and reduce funding for several programs without completely eliminating them. These cuts include:

  • $20 million cut from the Federal Supplemental Education Opportunity Grants (SEOG)
  • $25 million cut from the Federal TRIO Programs
  • $20 million cut from the Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR UP)

The summary posted by the House Appropriations Committee also indicates a 0.2% across-the-board cut for all federal programs. It remains unclear exactly how this across-the-board cut will affect federal student aid programs.

Overall, the bill cuts federal spending by nearly $40 billion, the largest cut to federal spending in a single year. It cuts a host of education programs including Teach for America, Even Start, and Education Technology State Grants, as well as other federal programs including emergency first responders, the National Endowment for the Arts and high-speed rail. Cuts to ED programs were relatively small compared to cuts to the Departments of Transportation, Housing and Urban Development, Commerce, Justice, Labor and Health and Human Services.

Congress is expected to vote on the bill as early as Thursday.

House Operating Budget Moves to the Floor

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Yesterday the House Ways & Means Committee moved the proposed biennial operating budget out of committee and to the House floor. The bill was approved on a vote of 16-11 in committee.

The committee adopted several amendments of which a handful impacted higher education. Among the changes was the elimination of the reserve hold back for progress on academic metrics in FY13 for all institutions.  Though the hold back remains for FY12 language was added which requires the Governor in making the determination to release these funds to make all best efforts to recognize the unique role, missions, types of communities and student populations of each institution of higher education.

In addition language was added to clarify that biennial funding for STEM enrollments for all institutions are for increased enrollments and each institution must report to the Legislature at the end of each academic year on how these funds affected STEM graduation rates.
Finally, $4.7 million was restored to the Higher Education Coordinating Board.
The budget was brought to the floor late this afternoon. It is expected that  tomorrow (Friday) the House will begin debate on amendments. Final passage of the budget proposal is planned for Saturday.  As for the Senate it is expected that they will release their budget early next week.

Senate Hears Key Higher Education Policy Bill

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Yesterday the Senate Ways & Means Committee held a public hearing on several bills that have been deemed necessary to implement the budget.  Among the bills heard by the committee was a bill that would provide a framework for higher education with regard to tuition, financial aid, and accountability and performance measures over the next four biennia (2011-2019).

Senate Bill 5915 would appropriate tuition in the operating budget for the 2011-13 biennium for all institutions and then allow for tuition flexibility beginning in the 2013-2015 biennium through the 2017-2019 biennium for all students. After 2019 tuition setting authority would revert back to the Legislature.

The tuition flexibility established in the bill beginning in 2013 is contingent on the successful negotiation of a performance contract and full mitigation of any tuition increase above 9% for Evergreen, CWU, and EWU and 11% for WWU, UW, and WSU for all students at 125% or below Median Family Income (MFI).

In addition the bill includes metrics established in the National Governor’s Association Complete to Compete initiative, a new Baccalaureate Incentive Program, efforts to increase federal tax credit requirements, and transfer provisions.

Representatives from the business community and the higher education institutions, including Evergreen, testified in support of the bill.  Testimony focused on the benefits the bill would provide to students and institutions of higher education.

House Republicans Unveil Alternative State Budget

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Yesterday the House Republicans introduced an alternative biennial budget. The Republicans used thirteen principles to guide their budget decisions.

The House Republican’s proposed biennial operating budget reduces state funding for higher education by $482 million (House Democrats -$482 million).

The Higher Education Sector
The majority of the total reduction to higher education came in the form of straight-up cuts to the four-year and two-year sector- $353.8 million (House Democrates -$353.8 million). In addition, the across-the-board reductions taken during the December supplemental budget by all public higher education institiutions were biennalized and included in the 2011-13 budget – $102.2 million (House Democrats -$102.2 million). The baccalaureate institutions and the community and technical colleges were also reduced one-time to reflect the fact that enrollment levels may be temporary – $26.3 million (House Democrats -$26.3 million). Finally, waiver authority for higher education institutions was capped at actual fiscal year 2010 levels and funding was reduced to reflect the difference between previous waiver authority and actual usage of the waiver – $71.6 million (House Democrats $0). 

Finally, state funding levels were  reduced to reflect a funding cap on higher education retirement plans (HERPs) of 6% – $49.6 million (House Democrats -$57.1 million). This is recognized as savings in the proposed budget.

The reductions in the House Republican proposal were offset in part by tuition increases at all public higher education institutions. The proposed budget authorizes tuition increases of 13 percent per year for the University of Washington, Washington State University, and Western Washington University; 11.5% per year for Central Washington University, The Evergreen Staate College, and Eastern Washington University; and 11% per year for the community and technical colleges – $379 million (House Democrats $379 million).

Despite the dramatic reductions in state funding and the tuition increases, the four-year public higher education institutions received additional funding of $1.5 million for Eastern Washington University, Central Washington University, and The Evergreen State College to provide, wrap-around services for low-income students (House Democrats $1.5 million). The Republicans did not include additional funding for STEM that was part of the House Democrat’s proposal.

The Republican proposal also includes $5 million for the Baccalaureate Incentive Program. Dollars would be distributed to the four-year, public higher education institutions based on demonstrated improvement in reducing the number of credits earned by students in excess of the number needed for graduation. This was not included in the House Democrat proposal. In addition, the House Republicans did not include the required hold back of funds for demonstrated improvement in metrics which measure academic progress and completion rates that was part of the House Democratic proposal.   

The Evergreen State College
Under this proposed budget state funding for Evergreen is reduced by $15.8  million over the biennium (House Democrats -$16.3 million).   This includes a combination of reductions in state funds and policy additions:

  • -$10.31 million in reduced state funding (House Democrats -$10.38 million)
  • -$1.92 million to reflect a proposed 3% salary reduction (House Democrats -$1.92 million
  • -$1.55 million for biennialized across-the-board reductions in December supplemental (House Democrats  $1.55 million)
  • -$1.024 million as a result of the 6% funding cap on HERPs (House Democrats – $1.024 million)
  • -$940,000 in one-time reduction (House Democrats -$940,000)
  • -$698,000 to reflect increase tuition revenue from tuition waivers (House Democrats – $0)
  • $500,000 to provide for wrap-around services for low-income students (House Democrats $500,000)
  • $150,000 in various studies for the Washington State Institute for Public Policy. (House Democrats $225,000)

The reductions to Evergreen’s state funding were offset in part by tuition increases for the 2011-13 biennium as stated in the budget. As a result, the net cut state funding for Evergreen is $8.45 million (-8.1%) compared to a reduction of $9.02 million, which is a net cut of 8.6% in the Democrat’s proposal.

Financial Aid
The House Republicans maintained funding for the State Need Grant at the same level as the House Democrats ($103.1 million).

The Republican’s proposal does not make the same policy changes to the State Need Grant that the House Democrats did in their proposal. In other words the Republicans maintained awards and award sizes for students attending private non-profit and for-profit higher education institutions.

Despite the increased financial support for the State Need Grant, several state financial aid programs are suspended for the 2011-13 biennium. The one exception is State Work Study. The Republicans reduced funding for work study but do not suspend it .  Those programs suspended include:

  • Health Professionals program
  • Washington Scholars
  • Washington Award for Vocational Excellence
  • College Assistance Migrant Program
  • Community Scholarship Matching Grant Program
  • Leadership 1000
  • Western Interstate Commission for Higher Education student exchange
  • Foster Care Endowed Scholarship
  • Child Care matching grant

A Deeper Dive into the House’s Proposed Budget for Higher Education

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The proposed budget, released by the House, is expected to move out of committee tomorrow (April 6 ).

The proposed biennial operating budget reduces state funding for higher education by $482 million. In addition to these reductions the budget also makes several changes to higher education in Washington with regard to funding for high demand fields, underrepresented students, and financial aid.

The Higher Education Sector
The majority of the total reduction to higher education  came in the form of straight-up cuts to the four-year and two-year sector- $353.8 million. In addition, the across-the-board reductions taken during the December supplemental budget by all public higher education institiutions were biennalized and included in the 2011-13 budget – $102.2 million. Finally, the baccalaureate institutions and the community and technical colleges were reduced one-time to reflect the fact that enrollment levels may be temporary – $26.3 million.

Though not represented as a cut in the budget, all public higher education institutions are required to put a specified amount of state fund dollars into reserve for each year of the biennium. The Office of Financial Management may release these funds to the institution only after each institution has demonstrated improvement in metrics which measure academic progress and completion rates as determined by the Governor. The metrics will be chosen by the Governor from the National Governor’s Association’s Complete to Compete initiative.   

Finally, state funding levels were  reduced to reflect a funding cap on higher education retirement plans (HERPs) of 6% – $57.1 million. This is recognized as savings in the proposed budget.

These reductions were offset in part by tuition increases at all public higher education institutions. The proposed budget authorizes tuition increases of 13 percent per year for the University of Washington, Washington State University, and Western Washington University; 11.5% per year for Central Washington University, The Evergreen Staate College, and Eastern Washington University; and 11% per year for the community and technical colleges – $379 million.

Despite the dramatic reductions in state funding and the tuition increases, the four-year public higher education institutions received some additional funding. This funding came in two forms:

  • $1.5 million was allocated to Eastern Washington University, Central Washington University, and The Evergreen State College to provide, wrap-around services for low-income students.
  • $1.4 million was allocated to each four-year, public institutiono to support 25 full-time enrollments in the STEM fields.

The Evergreen State College

Under this proposed budget state funding for Evergreen is reduced by $16.3 million over the biennium.   This includes a combination of reductions in state funds and policy additions:

  • -$10.38 million in reduced state funding
  • -$1.97 million to reflect a proposed 3% salary reduction
  • -$1.55 million for biennialized across-the-board reductions in December supplemental
  • -$1.49 million to hold-back in reserves based upon future performance on academic progress
  • -$1.024 million as a result of the 6% funding cap on HERPs
  • -$940,000 in one-time reductions
  • $500,000 to provide for wrap-around services for low-income students
  • $250,000 to provide for 25 full-time enrollments in the STEM fields (10 enrollments in FY12 and 15 additional enrollments in FY13).
  • $225,000 in various studies for the Washington State Institute for Public Policy

The reductions to Evergreen’s state funding were offset in part by tuition increases for the 2011-13 biennium as stated in the budget. As a result, the net cut state funding for Evergreen is $9.02 million (-8.6%) (total state funding reduction minus tuition revenue).

Financial Aid
The primary victory for higher education was increased funding for the State Need Grant ($103.1 million). The increase in funding from the $91 million proposed in the Governor’s budget will accomodate the proposed budgeted tuition increases at  two-year and four-year higher education institutions. It is unclear at this time how this will impact the 22,000 current students who are eligible for the grant but do not receive it due to a lack of funds.

In addition the budget proposes two major policy changes to the State Need Grant. First, award amounts are reduced for students at private institutions. The award amount is no longer linked to tuition and fees at the UW but rather to tuition and fees at the comprehensive institutions. Second, awards are eliminated to future students who attend for-profit institutions. 

Despite the increased financial support for the State Need Grant, financial aid took a large hit in the House’s proposed budget. Several state financial aid programs are suspended for the 2011-13 biennium.  These programs include:

  • Washington’s Work Study program
  • Health Professionals program
  • Washington Scholars
  • Washington Award for Vocational Excellence
  • College Assistance Migrant Program
  • Community Scholarship Matching Grant Program
  • Leadership 1000
  • Western Interstate Commission for Higher Education student exchange
  • Foster Care Endowed Scholarship
  • Child Care matching grant
  • Educational Opportunity Grants

U.S. House Passes Another Budget Stop-Gap Bill

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Yesterday the U.S. House passed another short-term stop-gap spending bill .

With a vote of 271-158, the House passed a three-week continuing resolution containing $6 billion in cuts. The resolution (H.J. Res 38) will expire on April 8.

None of the cuts included in this latest resolution would impact student aid or funding for the U.S. Department of Education.

Congressional Budget Office Proposes Reductions to Three Areas of Federal Financial Aid

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The Congressional Budget Office (CBO) has proposed cuts to three areas of financial aid spending in its annual report, “Reducing the Deficit: Spending and Revenue Options.”  

To reduce spending on student aid, the CBO proposes the elimination of subsidized loans to graduate students, a change in the interest rate structure for student loans and tighter eligibility criteria for the Pell Grant program.

“Under current law, students with an expected family contribution (EFC) exceeding 95 percent of the total maximum Pell grant award ($5,273 for academic year 2010-2011) are ineligible for a grant,” the CBO report states. “This option would make students with an EFC exceeding $2,500 ineligible for a Pell grant.”

Restricting the Pell Grant to the neediest students, the CBO argues, would focus the grant program on students with the greatest need.

Assuming that the maximum discretionary award level remains at $4,860 in future years, the CBO estimates that this option would yield discretionary savings of $2 billion through 2016 and $7 billion through 2021, along with accompanying mandatory savings of about $1 billion through 2016 and $5 billion through 2021.

The CBO report argues that eliminating subsidized loans for graduate students would help focus federal financial aid priorities on what some people consider the federal government’s primary responsibility — making higher education accessible to high school graduates.

“This option would end, in 2012, the practice of making new subsidized loans to graduate students, on the presumption that those students would generally take out unsubsidized loans instead,” the CBO report states. “The option would reduce federal outlays by more than $8 billion from 2012 to 2016 and by about $18 billion from 2012 to 2021.”

Additionally, the report proposes changing the structure of interest rates on federal student and parent loans to resemble those on fixed-rate mortgage loans.

“In particular, the interest rate on new loans would depend on conditions in financial markets at the time of origination but remain fixed for the life of the loan,” according to the report. “Under this option, the interest rate on all new federal student and parent loans would be set to the interest rate on 10-year Treasury notes at the beginning of the academic year in which the loan is originated plus 3 percentage points.”

The CBO estimates this option would reduce federal outlays by $900 million from 2012 to 2016 and by $52 billion from 2012 to 2021.

“Currently, the interest rate on all new unsubsidized and subsidized loans to non-undergraduate students is 6.8 percent,” the report states. “On all new PLUS loans, the interest rate is 7.9 percent. For the 2011-2012 academic year, the interest rate on new subsidized loans to undergraduate students will be 3.4 percent, but for all subsequent years, that rate will be 6.8 percent because of the expiration of a provision in the College Cost Reduction and Access Act of 2007.”

Congress has yet to finalize a budget for the remainder of fiscal year (FY) 2011, which ends Sept. 30, and is beginning debates on the FY2012 budget.

Another Short-Term Gap Spending Bill Considered in D.C.

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This week Congress is expected to approve a three-week, stop-gap spending bill that reduces federal spending by $6 billion, but does not cut student aid or funding for the U.S. Department of Education. 

The federal government is currently being funded by a two-week, stop-gap measure  that is set to expire on March 18. The three-week CR would prevent a government shutdown after March 18 and give Republicans and Democrats time to negotiate a long-term CR for the remainder of fiscal year (FY) 2011, which ends on Sept. 30.
 
The bill faces opposition from some conservatives in the House who are concerned that the bill does not included enough cuts, but Republican leaders in the House and Democratic leaders in the Senate have expressed confidence that they will be able  to pass the measure. The bill could be difficult for Democrats to oppose because the cuts are the same as those proposed by the Obama administration in its 2012 budget request.

U.S. Senate Does Not Pass Either Budget Bill

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Yesterday, the U.S. Senate voted 44 to 56  against H.R. 1, a seven-month fiscal year (FY) 2011 spending bill passed by the House on Feb. 19. 

H.R. 1 would have cut 2011-12 Pell Grant awards by $845 — more than 15 percent — and would have eliminated funding for the Federal Supplemental Educational Opportunity Grant (FSEOG).

The Senate also voted 42 to 58 to defeat a Democratic alternative FY2011 spending bill that would have trimmed an additional $6.5 billion from current spending levels, but would not have cut funding for Pell or FSEOG. Sixty votes were needed to pass either measure.

The Senate’s inability to pass either spending bill means lawmakers will have to yet again restart negotiations to craft a FY2011 spending package that will garner sufficient support in the House and Senate.

The federal government is currently being funded by a two-week continuing resolution (CR) that will expire on March 18. Because it is unlikely that Republicans and Democrats will be able to agree on a spending package before the current CR expires, Republican leaders in the House began planning another short-term CR to give more time to debate a long-term CR. Early reports indicate that House Republicans will propose $2 billion in cuts for every week the short-term CR covers.