Tag Archives: Financial aid policy

President Obama to Release FY12 Budget Next Week

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Next Tuesday, February 15, President Obama is expected to release his fiscal year (FY) 2012 budget request to the 112th Congress. 

The budget will contain proposed funding levels for student aid programs for the academic year 2012-2013. Many of these funding proposals face proposed reductions.

The release of the FY12 federal budget will be the first step of a lengthy and complex annual budget process that will last through July 2011.

It is important to note that Congress has yet to resolve the FY11 budget.  As a result, the federal government is funded by a Continuing Resolution that is set to expire on March 4. Upon its expiration Congress must pass either another resolution or an omnibus spending bill that contains all 12 appropriations bills.

Under this timeline FY11 and FY12 budget negotiations will occur at the same time. The

Higher Education Opportunity Act Introduced in Washington

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Today Representative Carlyle, Vice Chair for House Higher Education, launched the Higher Education Opportunity Act.

Carlyle stated “the trend in the Legislature is to reduce funding for the institutions of higher education under the operating assumption that they can continue to absorb the cuts without measurable or meaningful consequences for students, faculty, families and supporters. The trend of decreasing state support and increasing tuition seems virtually unstoppable. The question is not whether this trend will continue but how we can get a handle on the negative consequences for the middle class and more intelligently manage this structural shift.”

The Higher Education Opportunity Act would: 

  • Tuition-Setting Authority: For a four year window between academic years 2011 and 2014, public baccalaureate institutions are granted full local authority to set tuition rates for all students. After that four year time frame, tuition-setting authority for in-state undergraduates reverts back to the Legislature.
  • Dramatically Increasing Financial Aid for the Middle Class: Fifty percent of all tuition raised above a 7 percent ‘base’ per year at public baccalaureate institutions must be protected, reserved and spent by the institutions to fund new financial aid to directly increase assistance for the middle class. This allows students from families earning from 70% of medium family income (about $56,000 for a family of four–the current level of aid) to 125% of medium family income can receive substantial financial aid to mitigate the negative effects of rising tuition.
  • Institute a Radical Commitment to the Leverage Federal Tax Credits and Incentives: Strong requirements are put in place for higher education institutions to inform, educate and reach out to students about highly valuable federal tax credits available to them such as the American Opportunity Tax Credit and the Lifelong Learning tax credit.
  • Acknowledging Multiple Kid Family Costs for the Middle Class: In assessing higher education financing challenges, the Higher Education Coordinating Board (HECB) is required for the first time to consider family size as part of the family contribution for students of the state need grant, and is also required to establish criteria for awards that is not solely based on “first come, first served.”
  • Guaranteed Education Tuition (GET Program): The Committee on Advanced Tuition Payment (state treasurer, HECB director, OFM director, program participant and business rep) are required to review tuition levels and recommend a possible “GET II.”
  • Higher Education Institutional Accountability: The National Governor’s Association Complete to Compete Metrics are established in statute.
  • Eliminating Reports and Studies that are Duplicative or Unnecessary: Over the years the Legislature, Governor and boards have saddled the institutions with a huge number of reports, studies and data requests that may or may not be useful. This plan moves forward to eliminate the burden while keeping quality data available for public policy decision makers.

At a press conference this morning, Carlyle  shared that this legislation is a work in progress and needs time to ripen.  The bill is expected to be heard before the House Higher Educationo Committee next week.

TEACH Legislation Reintroduced in Congress

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This week U.S. Representative Baca (D-CA) reintroduced the Teacher Education Assistance Creating Hope (TEACH) for Our Future Act. 

The legislation is intended to provide all public elementary and high school teachers in the U.S. who have taught full time for five consecutive years the opportunity to receive $25,000 in student loan forgiveness.

Education Tax Credits Extended

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Last night the U.S. House of Representatives passed the tax and unemployment benefit package – The Middle Class Tax Relief Act of 2010.  The U.S. Senate passed the bill earlier this week.

The Act includes several financial aid provisions for higher education.

  • An extension of the American Opportunity Tax Credit
  • An extension of the above-the-line tax deduction for qualified education expenses
  • An extension of the expanded Coverdell Education Savings Accounts
  • An extension of the expanded student loan interest deduction
  • An extension of the expanded exclusion for employer-provided educational assistance
  • An extension of the exclusion from income of amounts received under certain scholarship programs.

The Act now goes to the President for his signature.

Latest Tax Agreement Includes Extension of Education Credits

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The tentative federal tax deal dominating the news includes potential benfits for students and their families. 

Yesterday, the Obama administration struck a tentative deal with Republicans to temporarily extend Bush-era tax cuts in order to garner support for additional tax breaks, including a two-year extension of the American Opportunity Tax Credit.

The American Opportunity Tax Credit, which is scheduled to expire at the end of this year, provides a tax credit of up to $2,500 per student for those who make less than $80,000 ($160,000 for joint filers). This credit is partially refundable making it available to low-income families that don’t owe any taxes.

Despite the deal, there is a lack of consensus, making final passage of the tax-cut extension deal uncertain, especially in the House where there appears to be more opposition to parts of the agreement.

In addition to the American Opportunity Tax Credit several other provisions are scheduled to expire at the end of this year if the 111th Congress is unable to extend expiring higher education tax breaks before it adjourns.

  • Section 127 Employer Provided Education Assistance — Allows employers to offer up to $5,250 in tuition assistance to employees annually. These funds offer tax benefits to both employers and student employees.
  • Enhanced Student Loan Interest Deduction (SLID) — Improvements made to SLID in 2001 are set to expire this year. If not extended, SLID will be drastically limited by reduced income thresholds and a 5-year limit
  • Expanded Coverdell Education Savings Accounts (ESAs) — Expansions to Coverdell ESAs made in 2001 are also set to expire this year. If allowed to expire, Coverdell ESAs will revert to allowing only $500 in tax-free annual contributions (currently $2,000).

Students and parents will be able to take advantage of these benefits when they file taxes in April 2011, but won’t know if they will be able to take advantage of them for the 2011 tax year (when they file in 2012) until Congress makes it clear if they will be extended or not.

In addition, several higher education tax benefits expired in 2009, including:

  • The above the-line deduction for qualified tuition and related expenses — Ideally, Congress will permanently extend the American Opportunity Tax Credit, which would eliminate the need for the tuition deduction to apply to undergraduate students in the future.
  • The Individual Retirement Account (IRA) Charitable Rollover — helps colleges and universities generate new or increased charitable contributions that can be used in a myriad ways to benefit students, including financial aid.

New Federal Regulations for Higher Education Expected

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This week, the Obama Administration is expected to release new finalized regulations for colleges and universities that participate in federal student aid programs.

The regulations amount to a significant expansion of federal oversight of higher education. The regulations range from efforts to reshape how admissions recruiters are paid to how course credits are defined to how career training programs are launched.

A hotly debated fourteenth proposal, known to many as the “gainful employment” regulation is still pending and expected to be resolved in early 2011. The “gainful employment” regulation would force for-profit colleges and others that offer non-degree vocational programs to meet new standards related to student debt to qualify for federal aid.

A list was released Wednesday of forty groups and institutions that had either met or will meet with the U.S. Department of Education in the coming weeks to discuss their comments on the gainful employment metrics.

In the works for over a year, the thirteen regulations were circulated among lawmakers yesterday. The rules will take effect July 1, 2011.

Pell Funding by Congressional District

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Yesterday the U.S. House Committee on Education & Labor releasd a list of Pell Grant awards by Congressional district.  The list includes figures for the total Pell Grant amount received as well as the number of recipients who report that district as their residence.

In Washington, the Third Congressional District, which represents The Evergreen State College, ranked second highest in the state for recipients of the Pell Grant (19,414) for AY 2009-2010. TheFifth Congressional District leads the state with 21,372 Pell recipients.

The Fifth Congressional District encompasses the Eastern Washington counties of  Okanogan, Ferry, Stevens, Pend Oreille, Lincoln, Spokane, Adams, Whitman, Walla Walla, Columbia, Garfield and Asotin.

The information is based on AY 2008-09 and AY 2009-2010 data from the U.S. Department of Education.  AY 2009-2010 grant information is estimated.

U.S. Department of Education Releases Strategic Plan for Financial Aid

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This week the U.S. Department of Education released a new strategic plan for the Department’s Office of Federal Student Aid.

The plan, Federal Student Aid: Strategic Plan, Fiscal Years 2011-15, identifies five strategic goals with several objectives for each goal. Each goal is aligned with performance targets to be achieved over the next five years.

  • Provide superior service and information to students and borrowers
  • Work to ensure that all participants in the system of postsecondary education funding serve the interests of students, from policy to delivery
  • Develop efficient processes and effective capabilities that are among the best in the public and private sectors
  • Ensure program integrity and safeguard taxpayers’ interests
  • Strengthen FSA’s performance culture and become one of the best places to work in the federal government

More specifically the plan calls for efforts to increase awareness about the availability of federal student aid and to educate students about the costs and benefits of specific postsecondary programs.  In addition, the plan promises increased oversight of for-profit colleges and a greater focus on the credit risks assoicated with student loans.

U.S. Subcommittee Passes Loan Bankruptcy Legislation

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Yesterday, the U.S. House Subcommittee on Commerical Adminsitrative Law passed the Private Student Loan Bankruptcy Fairness Act of 2010 (H.R. 5043).

The Act would allow for privately issued student loans in bankruptcy to be treated the same as other types of private debt. Loans made by governmental agencies or loan programs where “substantially all of the funds arre provided by a non-for-profit entity” would not be dischargeable unless borrowers could show an undue hardship.

The Act would restore language that existed prior to changes to the bankruptcy code in 2005.