Legislation Introduced in U.S. House to Allow Private Loans to Be Discharged in Bankruptcy

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Earlier this week, the Private Student Loan Bankruptcy Fairness Act of 2010 (H.R. 5043) was introduced in the U.S. House of Representatives.

The Act would reverse current bankruptcy protections for private student lenders included in the 2005 bankruptcy law and allow most private loans to be discharged in bankruptcy. Prior to changes made in the bankruptcy code in 2005, only federal student loans and private loans where substantially all of the funds were provided by a non-profit institution were non-dischargeable through bankruptcy.

The bill, introduced by Rep. Steve Cohen (D-TN), is scheduled for a hearing today before the House Judiciary Committee’s Subcommittee on Commercial and Administrative Law.

Proposed State Initiative Would Implement an Income Tax in Washington

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Yesterday, Bill Gates Sr., alongside other advocates, announced efforts to move forward an income tax proposal for the November ballot.

Initiative 1077 would be limited to the top 3 percent of earners in the state. The Initiative would allow the earnings above $400,000 for couples at 5% and above $ 1million at 9% to be taxed.  The thresholds would be half of those for individuals.

In addition, the Initiative would reduce the state’s share of property tax by 20% and create large tax credits for small businesses, minimizing the number of businesses that would pay any B&O tax. 

Income-tax initiative
I-1077

  • Individuals would pay 5 percent income tax on earnings over $200,000 a year and 9 percent on earnings over $500,000. For couples, those tax rates would kick in at $400,000 and $1 million, respectively.
  • The state portion of property tax would be reduced by 20 percent, or slightly more than $160 on the typical $371,800 King County home, according to figures from the assessor’s office.
  • The credit on state business and occupation taxes would rise from $420 to $4,800 a year, eliminating that state tax altogether for 80 percent of businesses and reducing it for another 10 percent, proponents say.
  • Income-tax revenues would offset reductions in property and B&O taxes and would funnel an estimated $700 million into an education trust account for class-size reduction and other purposes, and $300 million to the Basic Health Plan and long-term care.

Initiative 1077 is expected to generate $1 billion a year in new money for education and health programs given these parameters.

The I-1077 campaign will need to collect more than 241,153 valid voter signatures by July 2 to qualify for the November 2 ballot.

FAFSA Filings Rise by Double Digits in 2010

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In the first quarter of 2010, filings for the Free Application for Federal Student Assistance (FAFSA) climbed by 17.5% to 8.1 million filings.

According to the U.S. Department of Education, the double-digit rise in FAFSA filings for 2010 followed on the heels of a 26.% percent (6.8 million filings) rise in 2009-10 and a 5.9% (5.4 million filings) in 2008-09. 

Washington ranked 11th in increases in filings among the fifty states and D.C., with an increase of 23.1 % or 182,822 thousands more filings.  Utah (30.9%), Nevada (30%), and Arizona (29.9%) all saw the sharpest increases in filings while Pennsylvania (6.8%), North Dakota (6.5%), and Vermont (4.6%) had the smallest increases.

The U.S. Department of Education suggested that the rise in FAFSA filings were due to multiple drivers.

  • Increased enrollment of mid-career professionals seeking to gain new skills
  • Increased need for financial aid
  • Increased awareness of the importance of filing the FAFSA early
  • Simplification of the FAFSA form

Health Care Legislation to Impact College Students

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Two provisions in the recently-passed Federal health care legislation will directly affect college students.

The first, an extension of benefits for students under their parents’ plans, will allow college students to remain covered until the age of 26. The second, part of the Student Aid and Fiscal Responsibility Act (SAFRA), will change the way students borrow money for college. Instead of applying for private loans subsidized by the government, students may now apply directly to the federal government for borrowed aid. The bill also changes repayment requirements, allowing graduates to pay back their loans on a sliding scale based on their income. In addition, graduates who pursue employment in the public sector will enjoy the added benefit of loan forgiveness after ten years of service.

Changes to the Pell Grant were also made as part of the SAFRA, providing an increase in the award amount. In three years the grant will be changed to reflect the Consumer Price Index and be adjusted to keep pace with the rising cost of living.

Federal Legislation Introduced by Senator Patty Murray Would Improve Veterans Services

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Senator Murray, acknowledging the difficult job market and relatively inflated unemployment rates among veterans, has urged a commitment by the Federal government to veterans. Among its provisions, the legislation would:

  • Expand the GI bill to allow veterans to use benefits for apprenticeships and worker training programs in addition to college
  • Establish a Veterans Business Center program to help vets starting their own businesses
  • Create pilot programs to help vets utilize and expand technical skills learned in the military and market those skills to the civilian work force
  • Create the Veterans Conservation Corps, modeled on Depression-era Civilian Conservation Corps, which created jobs and facilitated construction projects around the country
  • Require a study that could lead to the expansion of the National Guard Employment Enhancement Project, which provides career transition assistance to National Guard members

Funding for the legislation is still pending a report from the Congressional Budget Office, but the bill already has bipartisan support in the Senate.

Evergreen Included in Princeton Review’s Guide to Green Colleges

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Citing its commitment to sustainability and carbon neutrality plan, the Princeton Review has included Evergreen in its first-ever Green Colleges Guide .

Traditionally an index of academic and campus culture factors, the Princeton Review has for decades rated colleges for students and parents researching higher education institutions. With the Guide to Green Colleges, the Princeton Review is responding to the 66% of students polled in 2009 who indicated that they would find information on potential colleges’ commitments to the environment useful in making their post-secondary school decisions.

According to publisher Rob Franek, the guide uses three main areas to gauge a college’s “green”-ness:

  • Providing students a healthy and sustainable quality of life
  • Preparing students for green jobs and responsible green citizenship
  • Using environmentally responsible school policies

The book itself also cites Evergreen’s LEED-certified Seminar II building and recent library renovations among the college’s green practices. In addition, the college’s commitment to sustainability are highlighted in its use of local and organic food, available transportation alternatives, and student-initiated groups and organizations addressing environmental issues.

Federal Legislation Introduced to Extend Education Stimulus Dollars

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On Wednesday, Senator Tom Harkin (D-IA) sponsored and introduced legislation that would create a $23 billion education jobs fund, modeled after the State Fiscal Stabilization Fund (SFSF) that was established in the American Recovery and Reinvestment Act (ARRA).

The Keep Our Educators Working Act would be awarded to local educational agencies and public institutions of higher education for the support of early childhood, elementary, secondary, and post-secondary education. Funds would be used for compensation and benefits and other expenses necessary to retain existing employees, hiring new employees and on-the-job training activities for education-related careers.

The Act is introduced at time when many policymakers and education leaders are increasingly concerned about the upcoming 2011 fiscal year with regards to the steep drop in available funds once the billions of federal dollars made available over the last biennium run out.

Under the proposed legislation, the hope is that the extension of federal assistance to higher education and education will ward off budget cuts and tuition increases. The Act would provide each state’s governor with a formula-driven share of the $23 billion with which to replace any money that they have cut or will cut from their 2010 and 2011 budgets for elementary/secondary schools and public colleges and universities.

The intent is that each Governor will distribute the funds proportionally based on the amounts cut from the two sectors, but can “adjust” the amounts by up to 10 percent of the larger of the two totals. In addition, the money can only be used for “compensation and benefits and other expenses necessary to retain existing employees” or hire new ones, or for “on-the-job training activities” for “education-related careers”.  The money could not be used to supplant state funds in a way that restores or supplements “rainy day” funds or pays of debt.

Finally, the legislation would require states to sustain a level of education spending comparable to what they spent in 2006. Specifically, the bill requires governors to spend on both higher education and K-12 at least a comparable portion of their states’ revenues in 2010 as they spent in 2006, and a comparable portion in 2011 as they spent in 2009.

The bill has been deemed “emergency” legislation, allowing the money to come out of federal mandatory rather than annually appropriated funds. This means that the costs of the bill would not have to be offset by cuts in other programs.

While education and higher education leaders are thankful for the investment, it is unclear how much benefit institutions may derive form the legislation if passed because the bill only replaces funds that have been or will be cut from the public college budgets.  It also raises questions regarding the role of the state in supporting and investing in their own public education institutions.

The $23 billion request proposed in Harkin’s Keep our Educators Working Act of 2010 has also been introduced in the U.S. House as a part of a freestanding jobs bill Local Jobs for Americans Act (H.R. 4812).

U.S. Senate Appropriations Committee Holds Hearing on FY11 Budget Request

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Late this week, the U.S. Senate Appropriations Subcommittee on Labor, Health and Human Services, and Education held a hearing on the Presidents FY11 budget request.  Senators reaffirmed their commitment to close any remaining funding gaps that remain in the Pell Grant Program.

“The Pell shortfall is another danger on the horizon,” stated U.S. Senator Harkin, Chairman of the Senate Appropriations Subcommittee on Health, Education, Labor and Pensions.

National Education Association Offers Alternative to Administration’s Rewrite of ESEA

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This week the National Education Association (NEA) put forward detailed recommendations for the overhaul of the Elementary and Secondary Education Act (ESEA).  The ESEA is up for renewal this year.

Many of the NEA’s recommendations offer an alternative approach to the Obama Administration’s blueprint for rewriting the Act. The different approach recommended by the NEA continues a recent divergence that began with the Association’s objections to the structure of the Race to the Top Fund.

The recommendations put forth by NEA differ in many ways, including:

  • Failing to refer to the idea of “teacher effectiveness” as measured by evaluations that incorporate student academic growth.
  • Providing a less prescriptive approach with regard to interventions to turn schools around.
  • Proposing fewer standardized tests.
  • Judging schools on growth toward an annual performance target and on their progress in closing achievement gaps. Schools that fell below the 5th percentile on one of these indicators would be subject to school improvement which would be local and involve input from external school review teams.
  • Adopting the Teacher for Excellence for All Children legislation sponsored by U.S. Rep. George Miller (D-CA).
  • Establishing stricter entry standards and changes to the law’s current “highly-qualified” teacher designation.
  • Creating new requirements on teachers entering the profession through alternative routes.

The release of these recommendations by the NEA is likely to be one of many voices that will be heard in the coming months with regard to changes to the ESEA.

Accountability for Higher Education Remains at Forefront for Obama Administration

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Reports from the Higher Learning Commission’s annual meeting emerged this week that indicated the Administration’s intent to continue the pressure initiated during the Bush Administration on colleges and universities to prove they provide a quality education at an accessible price.

The message from national higher education leaders who spoke at the meeting clearly communicated the Administration’s determination to hold colleges and universities accountable for performance or face undesirable consequences if institutions do not make meaningful changes on their own.

As Molly Corbett Broad, the president of the American Council on Education stated, “To the extent that federal policy makers are now willing to bail out banks and other financial institutions, and to take major equity positions in our auto makers, because those companies are too big to fail, then I believe it’s wise for us to assume they will have little reservation about regulating higher education now that they know it is too important to fail.”

So why all of this tough love? The Administration believes the vehicle by which to successfully educate more students to drive the economy is a college education.  However, for this success to materialize the Administration believes their is room for improvement with regards to performance.

Actions that underlie this intention are not hard to find.  In a brief scan of the higher education-related areas in which the Obama Administration has already delved, it is easy to recognize areas that historically would have been viewed as off-limits to federal action.

These include but are not limited to:

Still many college leaders are left scratching their heads with regard to specifics about how to bring about innovation that might persuade critics that believe higher education can be more productive without lowering quality.

The fact is that higher education institutions may not have much time to ponder. As Broad stated at the meeting, “If we fail to act, it is likely that change will be imposed upon us, with potentially serious consequences for the governance structure that has allowed the United States to develop the best, most inclusive ‘higher education system in the world.”