Higher Education Reauthorization Act
The House Committee on Education and the Workforce approved a bill to reauthorize the Higher Education Act in December. Committee Chairwomen Virginia Foxx (NC) is trying to secure enough votes to bring the bill to the House floor for a vote.
As adopted by Rep. Foxx’s committee, Promoting Real Opportunity, Success and Prosperity through Education Reform (PROSPER) Act includes some very positive provisions such as creating a $300 Pell Grant bonus for students who take 30 credits during an academic year and repealing regulations on credit hour, state authorization, and state authorization of distance education, and eliminating origination fees on student loans.
It also includes many program changes that have a significant impact on institutions and students. For example, the bill would:
- Eliminate SEOG and put the money into Federal Work Study through a new distribution formula.
- Make changes to loan limits, including imposing restrictive new annual loan limits on graduate students and parents.
- Structure institutional eligibility to Title IV aid on a program-by-program basis based on each program’s loan repayment rate, rather than through broad institutional eligibility that currently exists.
Other major changes include a restructuring of student loan terms and conditions. This includes eliminating all current loan forgiveness and income-based repayment programs for new student borrowers in favor of two options with limitations on the total amount of interest that can accrue.
While the Committee has done some thoughtful work in assembling its bill, the legislation needs serious revisions if it is going to be effective in helping, and not hurting, middle and low income students attend and complete college and to reduce, and not increase, regulatory red tape. In its current form, the bill would drive up the cost of college for students and dramatically increase the regulatory burden on colleges due to the new requirement that each major on campus must go through an annual test to determine if students can use federal loans and grants to major in that field.
In a letter dated May 18, 2018, SCICU asked each member of the SC House delegation to work with us and national organizations such as NAICU to revise the most egregious parts of the PROSPER Act to ensure that the very best interests of students are served to the greatest extent possible.
In the Senate, Health, Education, Labor and Pensions Committee (HELP) Chairman Lamar Alexander (R-TN) and Ranking Member Patty Murray (D-WA) have held a series of four committee hearings to address several HEA themes and ideas, identify a procedural framework for moving forward with a bipartisan bill, and request feedback from higher education community stakeholders. They are hoping to produce a bipartisan bill for release later this year.
FY 2018 Omnibus Budget
In March, Congress finalized FY 2018 spending with an omnibus bill that provides significant increases for the student aid programs and student loan and departmental management issues. Congress rejected the administration’s budget request for the Department of Education by setting the following funding levels for student aid:
- Pell Grant: $175 increase in the maximum grant, from $5,920 to $6,095.
- Supplemental Educational Opportunity Grant (SEOG): $107 million increase to $840 million.
- Federal Work Study: $140 million increase to $1.13 billion.
- TRIO: $60 million increase to $1.01 billion.
- GEAR UP: $10 million increase to $350 million.
It is important to point out that the $175 increase in the Pell Grant maximum is a discretionary increase in the maximum grant, meaning it is fully funded by appropriations. This is significant because it raises the baseline for funding the program, making it difficult to cut in future years.
Other programs of interest to private colleges also fared well in the final spending bill. All of the Strengthening Institutions Grants programs were increased, including a $12 million increase for Title III-Part A, to $99 million; a $15 million increase for Hispanic Serving Institutions, to $123 million; a $1.3 million increase for the portion of funding for Historically Black Colleges and Universities (HBCUs) that is funded through appropriations; and a $35 million increase for HBCU graduate institutions, to $280 million. The Work Colleges program was increased by $1.2 million, to $9.6 million.
For an in-depth look at the FY 2018 budget, follow the link to NAICU’s March 23 issue of Washington Update.
FY 2019 Omnibus Budget
On February 12, President Trump submitted his FY 2019 budget to Congress, proposing massive cuts to the federal student aid programs. If enacted, low-income students are going to have a much more difficult time affording a college education. Budget reductions in the area of higher education include:
- Supplemental Educational Opportunity Grants (SEOG): The budget proposes to eliminate SEOG, a cut of $733 million, arguing the program is duplicative of Pell, and does not target aid to the neediest students.
- Federal Work Study (FWS): The budget proposes to cut $490 million from FWS, leaving $500 million for a newly restructured focus on job training, not financial aid.
- TRIO and GEAR UP: The budget proposes to eliminate GEAR UP funding, a cut of $340 million, but incorporate its activities into TRIO, which is level-funded at $950 million for a new state distribution formula.
- Subsidized Loans: The budget proposes to eliminate the in-school interest on student loans taken out by low-income students.
- Institutional risk-sharing: The budget mentions support for institutional risk-sharing on loan repayment rates, but does not include any details.
House and Senate committees will continue work on the FY 2019 budget throughout the summer and into fall. Hopefully, the resulting appropriations for higher education programs will resemble those in the FY 2018 budget and not President Trump’s recent executive budget. The 2019 fiscal year begins October 1, 2019.