Tag Archives: financial aid

House Budget Committee Holds Work Session on Higher Education

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This afternoon the House Ways & Means Committee held a work session on higher education funding.

Committee members received several presentations focused on the funding trends and impacts of the Governor’s proposed budget for the two-year and four-year public higher education sectors and state financial aid programs.

Mike Reilly, Council of Presidents, shared with legislators the impact of state funding trends and the Governor’s most recent budget proposal on the six, public baccalaureate institutions. 

Since the 2007-09 biennium state funding for Washington’s public baccalaureate institutions has been cut by nearly $500 million or 28%. Current state funding is at the same level as it was in the 1999-01 biennium.

The Governor’s proposed 2011-13 budget would cut an additional $380 million in state funds (a reduction of nearly 50% in state support since 2007-09) leaving state support of approximately $1 billion as part of a proposed $32.1 billion state budget.

The Committe also heard from the State Board of Community and Technical Colleges, the Higher Education Coordinating Board and higher education legislative fiscal and policy staff.

Legislators asked a variety of questions ranging from what is the elasticity of tuition at the institutions to how does a change in focus from enrollment (inputs) to degrees (outputs) impact quality and access.

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.

Committee Hears Bill that Would Provide Greater Stability for Some Financial Aid Programs

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This week committees in both chambers held public hearings and work sessions in preparation for the next legislative deadline (March 25 for policy bills) and the development of the biennial budgets.

This afternoon the House Ways & Means Committee held a public hearing on a bill that would provide greater stability for Washington citizens who are eligible for the College Bound Scholarship Program and the State Need Grant.

Senate Bill 5304 would require the Caseload Forecast Council to forecast the anticipated number of students eligible for the State Need Grant and the College Bound Scholarship programs who are also expected to attend an institution of higher education. These forecasts would be submitted to the Governor and the members of the legislative fiscal committees to  facilitate budget development.

The Washington Caseload Forecast Council is responsible for developing forecasts for the changing caseloads in state entitlement programs. Currently, the caseload forecast includes the demand for services in health and human services, K-12 education, and corrections.

The Evergreen State College testified in support of SB 5304.

President Signs Stopgap Bill; Negotiations Begin Again

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Yesterday President Obama signed a two-week continuing resolution that reduces current federal spending by $4 billion and effectively eliminates the Leveraging Educational Assistance Partnership (LEAP) program.

The bill does not impact the current maximum Pell Grant.

With this  final hurdle for a short-term, stopgap bill completed, Congress now will begin to negotiate another continuing resolution to provide funding for the remainder of the c urrrent fiscal year. 

Last week the U.S. House passed H.R. 1 which would reduce federal spending by $61 billion, including reductions to higher education.  The U.S. Senate however has indicated that it will not pass a budget bill containing such deep reductions.

The Senate is currently drafting its own budget bill that is likely to include approximately $25 billion in reductions mosttly from President Obama’s FY12 budget request.  It is unclear at this time whether or not the Senate version will include similar cuts to higher education, in particular reductions to the maximum Pell Grant and the elimination of funding for the Federal Supplemental Education Opportunity (FSEOG) program.

House Higher Education Committee Holds Work Session and Hearing

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This morning members of the Washington House Higher Education Committee took a break from the floor.  The Committee held a work session on innovations in higher education and a public hearing.

The Committee heard two bills – HB 1816 and HB 1551.

House Bill 1816 is another bill that would look to restructure the current relationship between state funding, tuition, and financial aid for higher education in Washington. The bill suggests restructuring funding for higher education in the following ways:

 

  • Establishes a state funding/tuition balance for resident undergraduate and graduate students based on the cost of attendance and prohibits over-enrollment.
  • Eliminates Global Challenge States as a comparison model for funding.
  • Eliminates the role of the Higher Education Coordinating Board with respect to financial aid, eliminates state financial aid programs, and transfers responsibility for financial aid to the individual institutions.
  • Creates an internship program for which businesses may get a Business and Occupation tax credit based upon the salaries and benefits paid to interns.
  • Establishes a new loan program for upper division undergraduates and graduate students.
  • Requires students pursuing a bachelor’s degree to take a Rising Juniors test.
  • Directs adoption of articulation and transfer policies and establishes financial penalties for failure to meet the statutory implementation deadline.
  • Allows school districts to be charged for the cost of remedial education required by their students.
  • Abolishes the Workforce Training and Education Coordinating Board, and transfers responsibilities to the State Board for Community and Technical Colleges.

The Council of Presidents testified in support of continuing discussions about the relationship between state funding, financial aid, and tuition but with concerns regarding specifics in the bill such as the proposed distribution of financial aid in the bill and transfer policy.

The Committee also heard House Bill 1551 which would add regional universities and community and technical college Centers of Excellence to the membership of the Washington Technology Center and eliminates the Spokane Intercollegiate Research and Technology Institute and transfers its functions to the Washington Technology Center.

U.S. Senate Budget Committee Hears the Obama Administration’s Proposed FY12 Budget

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Yesterday U.S. Education Secretary Arne Duncan  presented President Obama’s FY 12 budget to members of the U.S. Senate Budget Committee.

The president’s budget would boost FY2012 discretionary spending for Pell Grants by $5.4 billion above spending levels in the FY2011 continuing resolution (CR) that is set to expire on March 4.  The increased funding would bring the total FY2012 discretionary funding for Pell to $28.6 billion.

The administration proposes reining in the cost of the Pell Grant program in FY2012 by eliminating the newly enacted “year-round” Pell Grant program that is designed to accelerate a student’s time to completion. The president’s budget would also eliminate interest subsidies for graduate student loans and direct those savings to the Pell grant program. The administration projects that its proposal — known as the Pell Grant Protection Act — would reduce the discretionary need for the Pell Grant program by $100 billion over the next 10 years. Legislative text for the Pell Grant Protection Act has yet to be released.

Senate Budget Committee Chairman Kent Conrad (D-ND) highlighted the challenge that growth of the Pell Grant program presents to Congress.

“The rising cost of college has outpaced the increases in the Pell award,” he said. “At the same time, due to the recession and increased demand for Pell grants, as well as changes that we made as to who qualifies, the cost of the program has increased. So, we’re paying a smaller share of the cost of college, but the overall cost of the Pell program has increased.”

Republicans argued that the administration’s proposal does not go far enough to rein in Pell spending.

“In 2008, we provided Pell Grants for 6 million, now we’re providing Pell Grants, under your proposal, for 9.6 million, doubling the entire budget and we don’t have the money,” said the committee’s Ranking Republican Sen. Jeff Sessions (R-AL). “You haven’t cut Pell Grants. Pell Grants are increasing dramatically.”

U.S. Senate Passes Stopgap Legislation

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This morning the Senate voted – 91 to 9 – to keep the federal government operating another two weeks through March 18 and cut $4 billion from the federal budget.    

The U.S. House of Representatives passed the two-week continuing resolution (CR) yesterday.

Education programs received a disproportionate 22 percent of the cuts, but the maximum Pell Grant would remain at $5,550 under the bill.

The only student aid cut in the bill was the elimination of funding for the Leveraging Educational Assistance Partnership (LEAP) program. This cut would provide $64 million in savings.   The bill would also make cuts several cuts to unfunded earmarks proposed by President Obama in his FY 2012 budget.

 The measure now goes to President Obama, who is expected to sign it.

What is Going on in D.C. with Higher Education Funding?

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Over the past month Congress has taken a series of steps that would impact federal funding for higher education.

On February 19 the U.S. House passed a seven-month long continuing resolution (H.R. 1) to fund federal programs for the remainder of FY2011. H.R. 1 reduced spending by almost $60 billion compared to FY10 spending levels.  Among the reductions included in H.R. 1 are several that would reduce funding for higher education.

  • Reduces discretionary-funded maximum awards for the Pell Grant from $4,860 to $4,105.  When the mandatory funds ($690) are considered the 2011-12 maximum Pell Grant award would be $4,705. This is a 15% decrease from 2010-11;
  • Makes proportionate reductions to awards below the maximum;
  • Reduces Pell eligibility for some of the highest eligible Expected Family Contribution groups;
  • Prohibits the U.S. Department of Education from using FY11 appropriations to implement, administer, or enforce gainful employment regulations;
  • Provides no funding for the Federal Supplemental Educational Opportunity Grant (FSEOG) and the Leveraging Educational Assistance Partnership (LEAP). Both programs provide financial grants to students who qualify for financial aid; and
  • Reduces President Obama’s proposed FY11 budget request by $100 billion.

An unintended consequence of the reduction to the Pell Grant included in H.R. 1 is the potential for the bill to trigger a provision in last year’s student-loan-overhaul law that conditions additional support for the Pell on Congress’ maintaining a “base” maximum award of $4,860. Under the overhaul, if lawmakers reduced the base below $4,860 the Pell Grant would become ineligile for mandatory “add ons” to the maximum starting in 2014.

According to an analysis by the Center on Budget and Policy Priorities, reducing the base by $845 to $4,105 as H.R. 1 proposes would result in the loss of $870 in mandatory money in 2014. Taken together, those reductions would cut the maximum award from the current $5,550 to $4,025.

The Senate has indicated that the reductions in H.R. 1 are too deep and are expected to release their version of a spending bill this week. It is expected that the Senate version will include nearly $25  billion in reductions, most of which were proposed by the Obama administration’s FY12 budget request. 

Despite all of this Congress has only five days to agree on a FY11 spending bill before the current continuing resolution bill expires on March 4 (this Friday). 

In a move that could temporarily prevent a government shutdown, if no agreement is reached by March 4, the House Republicans have proposed a short-term extension of federal funding that would continue to fund most federal programs at current levels for an additional two weeks (until March 18). In addition the extension would trim $4 billion from the budget. 

The reductions in the short-term Republican funding bill include earmarks that Congress had already agreed not to continue and programs that the President targeted for elimination in his FY12 budget, including LEAP. 

Senate Democrats have signaled some acceptance to the short-term proposal to allow more time to negotiate out a FY10 bill.

U.S. House Passes Stop-Gap Spending Bill

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Earlier this week, the U.S. House of Representatives voted 235 to 189 to approve a stop-gap spending bill (H.R. 1). H.R. 1  would fund the federal government for the rest of FY2011 after the current continuing resolution expires on March 4.

H.R. 1 cuts discretionary-funded maximum awards for the Pell Grant from $4,860 to $4,105.  When the mandatory funds ($690) are considered the 2011-12 maximum Pell Grant award would be $4,705. This is a 15% decrease from 2010-11.

In addition, the bill makes proportionate reductions to awards below the maximum, reduces Pell eligibility for some of the highest eligible Expected Family Contribution groups, and prohibits the U.S. Department of Education from using FY11 appropriations to implement, administer, or enforce gainful employment regulations.

The bill also provides no funding for the Federal Supplemental Educational Opportunity Grant (FSEOG) and the Leveraging Educational Assistance Partnership (LEAP). Both programs provide financial grants to students who qualify for financial aid. Finally, the bill reduces President Obama’s proposed FY11 budget request by $100 billion.

H.R. 1 now goes to the U.S. Senate for further consideration.