Tag Archives: higher education

Congress Reaches Deal on Student Loan Interest Rates, But Loans Still to Become More Expensive

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The U.S. Senate reached an agreement on legislation to prevent student loan interest rates from doubling on July 1.

Earlier this week the U.S. Senate agreed to extend the current 3.4 percent rate on Stafford loans for one year and provide $700 million extra for deficit reduction. The $6.7 billion agreement would primarily be funded from two pension measures.

The first would change how private pension interest payments are calculated. The second would increase premiums for companies participating in the Pension Benefit Guaranty Corporation. The two changes to pension measures would provide $5.5 billion.

The additional $1.2 billion would come from limiting how long a student could receive Stafford loans to 150% of the average time it takes to complete a degree. Currently there is no limit on loans.

The agreement now goes to the House for consideration. The U.S. House previously passed a loan extension bill that paid for the legislation by using funds from a preventative care fund in the health care law.

House leadership is signaling that a vote on the agreement will come early next week.

Despite this deal, college students will still see an increase in the cost of their federal loans.

Beginning on July 1 students seeking an advance degree will be responsible for paying the interest on their federal loans while they are in school and immediately after they graduate.

In addition undergraduate students who take out federally subsidized loans will no longer have their interest covered by the government during the six months after they complete school. This change applies to new loans issued through July 2014.

These students may benefit from the lower interest rate, but they will be charged this interest as soon as they graduate. For students who apply for federal loans next year they will have a higher interest rate – 6.8% – and have to pay as soon as they get done walking across the stage.

HECB Holds Final Meeting

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On June 28 the Washington Higher Education Coordinating Board (HECB) held its final meeting as a state agency.

The meeting focused primarily on the Board’s Call to Action and a dialogue with higher education stakeholders with regard to the current context of higher education in Washington and hopes for the new agency that will replace the HECB on July 1.

The Call to Action focuses on renewing the state’s commitment to serve more students. The call lays out the current context highlighting the reductions in state funding, the benefits of raising educational attainment, and the long-term impact of a disinvestment in higher education.

The call asks stakeholders and policymakers to maintain access and affordability with an eye to the future in this challenging fiscal environment.

As higher education institutions and states nationwide continue to grapple with new funding realities, we again stress the need to find new ways to invest in our children’s and our society’s futures by maintaining our historic commitment to educating all our citizens to higher levels. Institutions and states share this responsibility.

The Higher Education Coordinating Board will be replaced on July 1 by the Washington Student Achievement Council.

 

 

Washington Gubernatorial Candidates Debate

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On Tuesday the Association of Washington Businesses hosted the first gubernatorial debate in Washington.

The debate provided insight into how both candidates would address a range of issues facing Washington. Among the issues highlighted included charter schools, Initiative 1053 repeal, and jobs and the economy.

In addition both candidates spoke to their approach to fund higher education. Inslee spoke to his goal to cap the interset rate for state-backed student loans, expand online courses, and increase partnerships with the state’s premier private colleges.

McKenna focused on the need to stop the erosion of state support for higher education and restore funding levels to their historical average, enroll more in-state students in our universities, and emphasize degree programs that align with our future job needs, such as science, technology, engineering, math, math education, business management, accounting, and health science.

No additional debates between the two candidates have been scheduled to date.

U.S. Senate Committee Passes Education Spending Bill

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This week the U.S. Senate Appropriations Committee passed a spending bill that will increase some federal funding for higher education.

The bill would increase the maximum Pell Grant by $85 in the 2013 fiscal year and give $100 million more in funds to the National Institutes of Health.

The maximum award for the Pell Grant would increase from $5,550 to $5,635 in the 2013-14 academic year. The increase is a result of a mandatory inflation adjustment. Discretionary spending to the program would remain flat.

The bill also would keep spending flat for most other student-aid programs for the 2013 fiscal year, including the Supplemental Educational Opportunity Grants and Federal Work Study.

In addition the bill would:

  • Increase funding for international and foreign-language programs (from $74 million to $75.7 million)
  • Provide funding for the First in the World program which would allow colleges to test new approaches to education
  • Restore eligibility for federal financial aid to students without high-school diplomas or GED’s who have passed an “ability to benefit” test
  • Restore $50.72 million in funding for the Math and Science Partnership program
  • Reduce funds to Race to the Top for elementary and secondary education to office the restoration to the Math and Science Partnership program

The bill now goes to the full Senate for a vote. The U.S. House Appropriations Panel is expectd to draft its own version of the bill next week.

Romney Releases Education Plan

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Yesterday likely Republican presidential candidate Mitt Romney released his education plan, A Chance for Every Child: Mitt Romney’s Plan for Restoring the Promise of American Education, that outlines several broad themes related to K-12 and higher education.

The plan for higher education, A New Vision Of Affordable And Applicable Learning, recognizes the importance and value of the nation’s higher education system but expresses concern regarding the current direction of higher education in the United States.

Romney identifies a handful of challenges for higher education that must be addressed. Among the challenges is the position that federal funding is leading to an increase in tuition which in turn is increasing student indebtedness. In addition while traditional models of higher education are important, “other models of advanced skills training are becoming ever more important to success in the American economy, and new educational institutions will be required to fill those roles”.

In response to these challenges, Romney’s plan proposed reforms in the following areas:

  • Strengthen and simplify the financial aid system by consolidating duplicative and overly complex programs in the U.S. Department of Education and focus the Department’s work on giving students and families with financial need the information they need to make informed decisions;
  • Invite private sector participation instead of excluding it by reversing the Obama Administration’s implemenation of direct lending and return to bank-based lending; and
  • Replace regulation with innovation and competition by encouraging market entry of new education models, emphasize skill attainment and support research and development.

House Higher Education Holds Work Session

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Yesterday the House Higher Education Committee held a work session in Seattle. Transitions and partnerships between multiple sectors of education and industry were the focus of presentations to the Committee.

The Committee heard from two different panels that focused on transitions to higher education and within higher education. The first panel focused on transitions to higher education with an emphasis between key transition points from K-12 to postsecondary education. The second panel concentrated on transitions within higher education focusing on transfer and articulation as well as prior learning.

The work session closed with a discussion on the partnerships between higher education and industry. The panel highlighted technology transfer partnerships at the University of Washington and workforce training partnerships through Washington’s community and technical colleges.

Joint Committee Looks Ahead to Report on Impact Tuition-Setting Authority and Opportunity Scholarships & Expansion Program

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The Washington Joint Legislative Audit and Review Committee (JLARC) met yesterday to begin work on a report that will not be finalized until 2018.  The intention of starting now is to ensure that the data needed to complete the analysis is in place over time in order to meet legislative intent.

The focus of the presentation to the Committee was on the proposed scope and objectives of the report which will result in an audit of the impact of tuition-setting authority to public, baccalaureate institutions (HB 1795) and the creation of the Opportunity Scholarships and Opportunity Expansion program (HB 2088). 

Specifically the Committee will look at the impact of institutional tuition-setting authority on student access and affordability as well as on institutional quality.  In addition the report will evaluate institution’s compliance with specific provisions in HB 1795. Among those provisions:

  • Changes in undergraduate enrollment, retention, and graduation by race and ethnicity, gender, state and county of origin, age, and socioeconomic status;
  • Impact on student transferability, particularly from Washington community and technical colleges;
  • Changes in time and credits to degree;
  • Changes in the number and availability of online programs undergraduate enrollments in the programs;
  • Changes in enrollments in the running start and other dual enrollment programs;
  • Impacts on funding levels for state student financial aid programs;
  • Any changes in the percent of students who apply for student financial aid using the FAFSA;
  • Any changes in the percent of students who apply for available tax credits;
  • Information on the sue of building fee revenue by fiscal or academic year; and
  • Undergraduate tuition and fee rates compared to undergraduate tuition and fee rates at similar institutions in the global challenge states.

With regard to the Opportunity Scholarship and Opportunity Expansion program the focus will also be on student access and affordability.

Both of the pieces of legislation require a JLARC study in 2018. The Committee plans to combine the two studies into one report.

Washington Legislature Ends 2012 Supplemental Session

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The first special session of 2012 ended last night as of midnight. Though close the Washington Legislature did not complete business by this deadline and Governor Gregoire called the Legislature back for a second special session. After nearly eight straight hours of work from midnight to early this morning, the Legislature passed a balanced budget, jobs act, and a handful of policy reform bills.

Operating Budget

 The 2012 supplemental operating budget passed 64-34 in the House and 44-2 in the Senate and was delivered to the Governor for her consideration early this morning. The operating budget makes no reductions to K-12 and higher education.  Some of the highlights of the budget include $238 million to the general fund as a result of the state temporarily claiming control of local sales taxes before they are redistributed back to jurisdictions at their usual time, an increase in taxes raising about $14.5 million by eliminating a tax deduction for some large banks, additional revenue to the state through changing rules on roll-your-own cigarettes, and at the end a reserve fund of $320 million.

Impact to Higher Education

The operating budget as passed by the Legislature does not reduce general fund support for higher education, this includes further eductions to institutions and financial aid. The budget however does include some provisos and policy changes.

  • Bellevue College is authorized to offer baccalaureate degrees. Prior to the passage of this bill the College could only offer applied baccalaureate degrees.
  • The two and four year institutions are required to conduct a comprehensive review of institutional tuition waiver policies.
  • Evergreen is required to reallocate $276,000 for FY2013 for an expansion in enrollments in STEM as defined in HB 1795. This definition includes bachelor and advanced degree programs in the sciences, which includes agriculture and natural resources, biology and biomedical sciences, computer and information sciences, engineering and engineering technologies, health professions and clinical sciences, mathematics and statistics, and physical sciences and science technologies, including participation and degree completion rates for students from traditionally underrepresented populations.
  • The Washington State Institute for Public Policy is required to conduct a longitudinal study of the state need grant program ($100,000).
  • The two and four year institutions are not permitted to use state appropriated funds to support intercollegiate athletic programs
  • Changes state payments for public employee health benefits from $850 to $800 per month

Capital Budget and Jobs Act

The 2012  capital budget made no changes to Evergreen’s biennial capital budget. The Jobs Acts  which includes a new bonds bill and the traditional capital budget  are estimated to have an economic impact of $1.1 billion in construction work over the next 14 months.  

Reform Bills

As critical to the process as balancing the budget were efforts to pass reform bills to provide for greater long-term sustainability in the state budget. Among the policy bills passed by the Legislature three were critical to finally ending the 2012 supplemental session.

Pension

SB 6378 addresses early retirement benefits for future state employees.. Under law changes in 2000 and 2007, an employee with 30 years’ service could retire at age 62 with no reduction in benefits, and at age 55 with only a 20 percent reduction. Under the new law, retirement at age 62 will lower the benefit by 15 percent and age 55 by 50 percent. The savings will go to the state’s general fund.

 K-12 Healthcare

SB 5940 attempts to equalize health-insurance benefits for full-time and part-time school district employees and their families. The bill requires school districts to meet certain requirements, including making all employees pay a share of premiums, offering a high-deductible health plan and tying the price of individual and family benefits.

Balanced Budget

SB 6636 requires the state’s two-year budget to be in line with anticipated revenue over a four-year period or 4.5% growth per year, whichever is greater.   Growth has met or exceeded 4.5 percent in half of the past 16 years.

Congressional Republicans Release Budget Proposal

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Late this week the Republicans in the U.S. House of Representatives released a budget proposal for fiscal year 2013.

According to the author of the budget proposal. U.S. Representative Paul Ryan, the proposal would reduce next year’s deficit to $797 billion, a lower figure than the $977 billion deficit the Congressional Budget Office estimates would result from the president’s budget. Ryan also estimates it would reduce deficits over the next decade by $3.3 trillion more than the Obama budget.

The proposed budget would impact multiple frederal programs and services. The proposal cuts discretionary spending beyond the required reduction levels  in the debt ceiling agreement established last year. The budget would set discretionary spending for 2013 at $1.03 trillion, which is $20 billion less than the discretionary cap agreed when Congress increased the debt limit in August. The proposed budget also instructs six committees to find $261 billion in replacement savings over 10 years, and $18 billion in savings in the next year alone.

The limits to discretionary spending will impact all non-military and non-entitlement programs, including several higher education programs. The one exception in the budget is basic research which is funded at current maintenance levels. Beyond the decrease in discretionary funding, the budget proposes a handful of key changes specific to higher education.

Within the framework of the proposed budget, changes to higher education are noted under the heading “Repairing the Social Safety Net”. According to the budget proposal:

The safey-net system created in the last century is in dire need of a new round of reform. Government programs that aim to support the safety net are failing the citizens who rely on them and the taxapyers who fund them. A system designed for mid-20th century demographics and economics is ill equipped to deal with the unique pressures of the 21st century.  From a budgetary perspective, these programs are growing at an unsustainable rate…From a moral perspective, which well-intentioned, the paternalistic structures of these programs fail the very people they are intended to help.

Specific to higher education the budget proposal notes that:

Globalization and technological advances have made the modern economy more complex and dynamic. The new reality is workers at all levels must be ready to update or learn new, more specialized skills to match the changing needs of employees competing in the global economy. Federal higher eduation and job-training programs must be reformed to help workers adapt to this new challenge. Current federal aid structures are exacerbating a crisis in tuition inflation, plunging students and their families into unaffordable levels of debt or foreclosing the possibility of any higher education at all…these young adults are graduating with enormuous loan repayments and having difficulty finding jobs in our low-growth economic environment….But, instead of helping more students achieve their dreams, studies have shown that increased federal financial aid is simply being absorbed by tuition increases…when it comes to job training and continuing education, the current policy landscape is dotted with failed, unaccountable and duplicative programs.

The higher education context laid out in the budget proposal drives three major recommendations for change to current higher education policy.

Pell Grant

The proposal calls for placing the Pell Grant on a “sustainable path by limiting the growth of financial aid and focusing it on low-income students who need it the most”. The goal, according to the proposal, is to force institutions to reform and adapt and to ensure that Pell spending goes to students who truly need it.

In addition the proposal makes the argument that federal intervention in higher education should be focused on financial aid as well as policies that maximize innovation and ensure a robust menu of intitutional options from which students and their families can choose. To achieve this goal the suggestion is made to re-examine the data made available to students to make certain students and familes are prepared with information that will assist them in making their postsecondary decsions.  Finally the proposal recommends removing regulatory barriers in higher education that act to restrict flexibility and innovative teaching, particularly as it relates to online coursework.

The proposal does not state specific spending levels for the program.

Change How Student Loans are Viewed on the Federal Government Balance Sheet

The budget proposal would authorize the use of “fair-value” accounting principles for any legislation dealing with federal loan and federal loan guarantee programs. The budget would make this change by altering the Credit Reform Act (1990).

The Act allows Congress to treat loans differtently from other types of spending in the federal budget. Before the Act was passed, loans were measured in the cash flow of expenditures and repayments in a given year. After the Act, the cost to the government of loan programs was measured using the total value of the loans.

This change would allow for market risk to be taken into consideration rather than relying on the Treasury borrowing rate. As a result student loans would appear to be a slight loss on the government’s balance sheet, because it would take into account the difference between what the govenrment would earn and what a private leander would earn on the loans. As a result the change would make the federal deficit appear slightly larger.

This, however, does not mean that changes to loan programs are inevitable.  But, the impact, critics share, is that this accounting change would change how loan program costs are scored by the Congressional Budget Office. Some argue that this change would create a more difficult enviornment for new loan programs. Additional loans would appear to lose the govenrment money in the long term, not break even which makes for a harder sell.

Consolidate Overlappyting Job-Training Programs into Accountable Career Scholarships

The proposal calls for consolidating several job-training programs into scholarships to “improve access to career development assistance and strengthen the first rung on the ladder out of poverty”. The budget would establish, from the consolidation of these programs, a streamlined workforce development system with fewer funding streams that provide accountable, targeted career scholarship programs.  In addition the proposal would improve oversight and accountability for job-training programs by tracking the type of training provided, the cost per student, employment after training, and whether or not trainees are working in the field for which they were trained.

Other Budget Proposals

The congressional Democrats have not released a budget proposal. However earlier this year President Obama did release a budget proposal. An overall comparison of President Obama’s budget and the Republican proposal shows very different philosophies for moving forward.

Under the President’s proposal, funding for the National Science Foundation would increase by 5 percent, to $7.4 billion and the National Endowment for the Humanities  would get a slight increase, from $146 million to $154. The American Opportunity Tax credit is also made permanent – providing up to $2,000 per year for tuition.

With a goal for the US to “lead the world in college graduates by 2012,” specifics include:

  • Sustaining the maximum Pell Grant award of $5,635 through the 2014-2015 award year.
  • A one-year measure to prevent student loan interest rates from doubling this summer and doubles the number of work-study jobs over the next five years.
  • New reforms that shift federal aid away from colleges that do not keep tuition low.
  • Making permanent the American Opportunity Tax Credit.

Next Steps

Beginning with a committee markup Wednesday morning, the U.S. House of Representatives hopes to move the proposal through the House by the end of this week. And as most lawmakers  leave for spring recess, six House committees would be left with an April 27  deadline to report back legislation that would become a down payment of $261  billion in deficit reduction — to be brought to the floor in May.

Students Without Diploma or GED No Longer Eligible for Pell Grant

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As of July 1, when the new federal budget goes into effect, newly enrolled students are required to have a high school diploam or a GED in order to receive federal financial aid.

Prior to the passage of the latest federal budget, students who wanted to attend college but lacked a high school diploma or a GED were able to have access to federal financial aid by completing a basic skills test to prove their “ability to benefit” from a college education or successfully completing six credits.

As of July 1 these options will no longer meet federal eligibility requirements and students will have to earn a diploma or a GED to be eligible for aid.