Mixed Bag for Student Financial Aid

Posted on by

Washington students received a mixed message with regard to financial aid this week.

On Monday it was reported at the state level that more Washington college students who qualify for state grants based on financial need are being denied.At the federal level, it was noted int he media that students are expected to experience bigger and better grants.

According to Washington’s Higher Education Coordinating Board (HECB) more than 15,000 students who qualify for the state’s largest financial aid program, the State Need Grant, did not receive a grant this year. This is three times the number in previous academic years. The reason there is more demand than there are funds.

At the federal level the story appears to be much less gloomy. An estimated 8.4 million students, approximately 617,000 more than last year, are expected to receive federal Pell Grants in the 2010-11 academic year. In addition, the average student will likely see an increase in the size of their Pell Grant, approximately $220 more.

In addition to the increase in both the size and number of available Pell Grants, eligible students will have access to other grants. On July 1, the federal government will launch the Iraq and Afghanistan Service Grant, which awards $5,500 to any college student whose parent or guardian died while serving in the armed forces in Iraq or Afghanistanafter 9-11.

Finally, the federal government will continue to award Academic Competitiveness Grants of $750 to freshman and $1,300 to Sophomores who qualify for Pell Grants and get good grades in rigorous courses. SMART grants will also continue with a payout of $4,000 to upperclassmen who qualify for Pell Grants and have earned at least B averages while majoring in science, math, or in-demand languages.

Though this appears to be good news on the surface, funding reductions to higher education institutions nationwide will likely limit the improvements to the Pell Grant and other financial aid programs as tuition increases and states find themselves with large funding gaps in state scholarship and grant programs.

Obama Administration Proposes Student Financial Aid Rules

Posted on by

Last week the Obama Administration proposed a set of rules and definitions to, in their view, strengthen federal student aid programs.

The Notice of Proposed Rulemaking (NPRM) covers several issues.

  • Ensures that only eligible students receive federal funds;
  • Protects consumers from misleading or overly aggressive recruiting practices;
  •  Clarifies state oversight responsibilities; and
  • Clarifies the courses that are eligible for federal aid, and the amount of aid that is appropriate.

The NPRM reflects the work of the U.S. Department of Education and the higher education community around 14 specific issues over the last year.

The NPRM is subject to public comment. The Department plans to closely review all the comments it receives with the goal of publishing a final rule by November 1. This would allow any changes to take effect July 2011.

Research Reveals Effects of Recession on Freshman Enrollment

Posted on by

A new report by the Pew Research Center demonstrates the effects of the Recession and a boom in minority high school graduation rates on freshman enrollment. The report is an analysis of recent statistics published by the U.S. Department of Education and suggests that the significant growth in minority freshmen, particularly among Hispanic students, could be a result of demographic changes. The report cites a changing youth population in the country, which is more diverse than the current population of adults, as a possible cause for the increase. In addition, Hispanic high school graduation rates reached an all-time high in 2008 of 70%, an increase of 2.5% from 2007.

 While the overall increase in enrollments appears to be sector-wide, the spike in minority enrollments is concentrated in two-year and less-than-two year institutions, where minority students enroll at higher rates than their white peers. At four-year institutions, minority students enroll at less selective schools compared with whites.

 The increase in minority enrollment corresponds with a decrease in white enrollments; in 2007, whites constituted 55% of freshmen at less-than-four-year institutions. By 2008, whites were only 53%. At four-year institutions, whites represented 64% of freshmen in 2007 and 62% by 2008. The increase in minority enrollments, however, was concentrated in certain states and a small number of colleges and universities. Of the 144,000 total increase in freshmen enrollment, around 72,000 were at 109 colleges and universities. As a result, less than 2% of the nation’s colleges and universities absorbed half of the enrollment boom.

Obama Administration’s Unpaid Internship Regulations May Limit Opportunities

Posted on by

In a rapidly shrinking job market, the new graduate faces unparalleled challenges in finding work. Even before the recession, the college internship operated as an intermediary step between education and employment. In April, however, the U.S. Wage and Hour Division released a Fact Sheet on the legalities of hiring unpaid interns, presenting criteria for prospective employers to meet before moving forward with intern employment.

The criteria brings prevailing labor laws into perspective, requiring that the intern “not displace regular employees,” that the internship be “similar to training which would be given in an educational environment,” and that the employer “derives no immediate advantage from the activities of the intern.”

According to a recent article in the New York Times, these requirements may hurt, not help, potential interns. Many companies and institutions that had previously offered unpaid internships cancelled their programs as a result of the Fact Sheet, or cut down on the number of interns they hired. The Times article highlighted the potential unfairness of access to unpaid internships by students who have the means to spend an entire summer without gainful employment. However, in an economic climate that offers few opportunities to young people, it’s hard to begrudge anyone a head start on a career.

Signatures for State Initiatives Due Today

Posted on by

Today is the deadline for initiative campaigns to submit signatures to the Washington Secretary of State for the November ballot.  Washington requires 241,000 valid signatures for an initiative to be placed on a ballot.

Over sixty proposed initiatives were filed with the Secretary of State.  As of today, six initiatives appear to have met the signature requirement and will be on the November 2010 ballot.

  • I-1100: Privatizes liquor sales
  • I-1082: Privatizes workers’ compensation option
  • I-1105: Privatizes liquor but includes some state controls around pricing and licensing
  • I-1053: (Re)Institutes a two-thirds majority rule on the Legislature for raising taxes
  • I-1098: High earners income tax
  • I-1107: Repeals the recently passed tax on soda.

Federal Financial Reform Legislation Changes Student Loan Practices

Posted on by

The Wall Street Reform and Consumer Protection Act of 2009 (H.R. 4173) passed the U.S. Senate this week and is now headed to the President’s desk for signature.

The Act has significant implications for the student loan industry. The most significant change provides the newly created Consumer Financial Protection Bureau with authority over virtually all types of non-federal student loans, including those that for-profit colleges make to their own students.  The Bureau will have supervision over loans made by all non-banks and by banks with more than $10 billion in assets.

The Act also creates a separate student loan ombudsman position within the Bureau. The ombudsman position is designed to provide student loan borrowers with a central place for information and to seek assistance with concerns and/or problems.

What is the Status with Washington’s Anticipated Federal Dollars for 2010-2011?

Posted on by

Congress continues to debate over the inclusion or exclusion of federal Medicaid dollars to states.

Twenty-eight states, including Washington, crafted budgets for FY10 assuming Congress would approve additonal Medicaid dollars.

Governors, including Washington’s Governor Gregoire,  from across the country lobbied Congress hard this week with an eye to the July 1 state budget deadline. The Medicaid extension is set to expire at the end of 2010, halfway through the fiscal year that begins in most states on July 1. 

The extension was first included in the 2009 economic stimulus bill. Since then the extension has faced a rocky road. Both chambers of Congress have passed different variations of the request and President Obama has called the aid necessary to avoid massive layoffs.

Despite this support, the extension and the dollars it would bring to states cotninues to be attached to congressional bills that die for one reason or another.

As Congress continues to move forward without securing the extension and funding, states are moving forward and beginning to consider their next steps. At question is how quickly cuts would have to be made if Mediciad dollars are not included in legislation passed by Congress.

For Washington the lack of additional federal Medicaid dollars would result in a reduction of $480 million to the state budget. If the dollars do not come through Washington’s budget reserves could be eliminated and the state would face an additional $200 million in budget cuts.

The Governor could make these cuts across-the-board or call the Legislature in for a special session.

Stay tune!

U.S. House Passes Supplemental Spending Package, Benefits to Higher Education

Posted on by

On Thursday, the U.S. House of Representatives passed the Supplemental Appropriations Act of 2010 (H.R. 4899). The Act is a mixed bag for higher education.

H.R. 4899 included a provision to provide $10 billion to help school districts avoid educator layoffs. Though this is good news, the funding provision comes at the cost of reductions ($800 million) to several of President Obama’s key education initiatives. 

The initiatives vulnerable to reductions have been referred to as “new discretionary grant awards”. Among these awards includes a reduction of $500 million to the Race to the Top Round 2 awards. Washington is one of thirty states competing for Race to the Top dollars in the second round.

On a more positive note, the House bill includes $4.95 billion to pay down most of the $5.7 billion Pell Grant shortfall. The $4 billion included in the bill is not based on new estimates regarding the Pell Grant shortfall, but is the most the bill’s authors could include into the package of spending and offsets. If the package passes the Senate with the Pell Grant funding included there still remains a $717 million shortfall in Pell funding.

Finally, the Act passed by the House included a budget enforcement resolution that would limit discretionary spending for FY11 to $1.12 trillion, which is $7 billion less than the President requested in his budget in February.

The Act passed by the U.S. House must still be approved by the U.S. Senate.  As the Senate considers the Act, it is expected to face pressures from the education and higher education sectors, the U.S. House, and the White House which has indicated that the President would likely veto any final bill that includes reductions to education reforms.

State Releases Six-Year Budget Outlook

Posted on by

The combined released today of the Governor’s plans to transform the state budget and the Office of Financial Management’s six-year budget outlook make it clear that the state economy will slowly recover. The Governor in her letter to Washingtonians stated, “…we expect budget challenges to be in place for at least the next four years.”

This is evident in the documents provided by the Governor’s Office and the Office of Financial Management. Both show projected budget shortfalls for the 2011-13 biennium ($3.053 billion) and 2013-15 biennium ($8.761 billion).

Both shortfalls are directly related to expected new costs over the next four-years, including replacement of federal funds, medical inflation, pension obligations, K-12 basic education obligations, and funding for voter initiatives I-728 (class size) and  I-732 (teacher salaries).

In its release of the six-year budget forecast, the Office of Financial Management notes that the shortfall estimates for 2011-13 and 2013-15 are based on budget obligations in current law and the latest official revenue and caseload forecasts. In addition, they recognize that any solution to the 2011-13 budget gap would reduce the projected gap in later years.

Governor Announces New State Budget Process

Posted on by

Governor Gregoire announced a new state budget process for the 2011-13 biennium. Her intention is to develop a new biennial budget with more transparency, community involvement, and expert outside advice.

The new budget process will assume zero-based budgeting from the beginning. Zero-based budgeting focuses on reviewing the current and alternative funding levels for each agency activity (including zero).

In addition, each agency will be asked eight critical questions before their budgets are increased or shuffled. These eight questions are:

  • Is the activity an essential service?
  • Does state government have to perform the activity or can it be provided by others?
  • Can the activity be eliminated or delayed in recessionary times?
  • Does the activity need to be paid for with state general funds? Should users pay a portion of the costs?
  • Are there federal funds or other fund sources available to support this activity?
  • Are there more cost-effective, efficient ways to do the activity?
  • Can the activity be the subject of a performance contract?
  • Can the activity be the subject of a performance incentive?

The process will include a public component involving the opportunity for citizens to submit suggestions and a statewide tour to share the new budgeting process.

Finally, the Governor has asked leaders from across the state in a variety of fields to serve on the Governor’s Committee on Transforming Washington’s Budget. This panel will serve in an advisory capacity to the Governor during the budget development process. The charge of the committee is to quest budget assumptions, serve as a sounding board, and lend guidance.

The Governor also issued a time-line for the development of the 2011-13 budget. It is expected that as other dates and locations for budget hearings across the state are confirmed they will be announced.

  • Spring 2010                        Committee on Transforming the Budget formed
  • July 19, 2010                     First Budget hearing (Tacoma)
  • Early September 2010   Agency budget requests due
  • September 16, 2010        Updated revenue forecast adopted
  • November 18, 2010        Update revenue forecast adopted
  • Mid-December 2010      Governor’s proposed 2011-13 budget released
  • January 10, 2011             2011 Legislative Session begins