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Today, federal student financial aid programs are big business, totaling over $81 billion disbursed to almost half of all college students. Federal programs provide over 70% of all available student aid funds, compared to 19% from private and institutional sources, 5% from federal tax credits and 5% from state grant programs (1). As the federal programs have grown, the government has stepped up oversight of its investment. As the Higher Education Act has become more complex and grown into a document of over 500 pages, Congress has used student aid as leverage to expand the scope of the Higher Education Act into areas formerly left up to institutional control, such as, campus security, definitions of eligible academic programs, consumer information, and voter registration.
A Bit of History and Process
It is interesting to note that most major higher education legislation was created during a time of war or national crisis. World War II brought the passage of the GI Bill (Servicemen’s Adjustment Act) in 1944, which started this country’s tradition of providing federal funds for students in higher education, although it was restricted to veterans.
The next major piece of higher education legislation, the National Defense Education Act, creating the National Defense Student Loan program, was passed in 1958 in response to the need to build our intellectual arsenal during the Cold War. This bill marked the first program targeted to any financially needy college student, still the philosophical underpinning of the federal student aid programs. Much of the credit for establishing that focus goes to President Johnson and his dream of a “Great Society”. His social programs included the Economic Opportunity Act of 1964, which created the Federal Work-Study, Head Start, Vista and Upward Bound, along with Talent Search and Student Support Services, now known as the Trio Programs. One year later, in the midst of the Viet Nam War, the omnibus Higher Education Act of 1965 was passed, which incorporated the existing student aid programs, except for the GI Bill, and added the Educational Opportunity Grant Program (now the Supplemental Educational Opportunity Program) and the Guaranteed Student Loan Program. Since that time, most new programs or changes to existing programs have come about as amendments to the Higher Education Act of 1965. The Basic Educational Opportunity Grant Program, now the Pell Grant Program, was part of the Higher Education Act (HEA) Reauthorization of 1972. Since then, the HEA has been reauthorized in 1976, 1980, 1986, 1992 and 1998.
As of this writing, both the House Committee on Education and the Workforce and the Senate Health, Education, Labor & Pensions Committee have completed marking up their bills and must now get their bill approved by their respective branch of Congress. A Conference Committee will be formed to iron out differences between Senate (S 1614) and House (HR 609) versions before the bill is sent to the floor of both houses of Congress for a vote. At any point in the voting process, amendments can be offered from the floor changing the provisions of the bill.
Once both houses agree to the bill, it goes to the President for signature and becomes law. The action then moves to the U.S. Department of Education (USDE). It is the job of the USDE to provide regulations that interpret or clarify the language in the law for those of us who actually have to implement it. In 1990, Congress passed the Negotiated Rule-Making Act of 1990 directing federal agencies to follow a formal consultation process when writing federal regulations. Since the 1986 Reauthorization, the Department of Education has called together representatives from higher education to form negotiated rule-making committees when new federal regulations are needed. Working with the actual language of the law and what they know of Congress’s intent when the bill was written, the committees are charged with writing regulations that clarify the law where it is ambiguous and provide the operational details needed by colleges or the Department of Education for implementation. This process can be a contentious when one segment’s interests conflict with another’s or tedious when trying to define terms, such as, how to count weeks in an academic year, but is a process that most people consider to be fair and inclusive (2). We are very fortunate that, in the past, the American Association of Community Colleges and the USDE have primarily appointed the community college representatives from California. Linda Michalowski, CCCCO Vice Chancellor for Student Services, has often served as a lead negotiator. In addition, Susan Lipsmeyer, Financial Aid Director at Grossmont College, and I have also participated as negotiators representing community colleges.
We are currently in midst of a reauthorization of the Higher Education Act that Congress began working on in 2004 and is expected to complete in late 2005 or early 2006. In addition to financial aid issues, Congress is looking at college costs, college policies regarding acceptance of transfer credits and institutional demographic reporting requirements. Some of these may be of particular interest to California Community Colleges.
Some HEA Proposed Amendments of Interest to CCC’s
Change in Allocation Formula for Campus-Based Funds (FWS, SEOG, Perkins)
The House bill recommends eliminating a guarantee that many colleges and universities have had assuring them of high levels of FWS, SEOG and Perkins funds over schools with high numbers of low-income students, such as, community colleges. It is expected that this would shift funds from private universities in the Northeast to public universities and community colleges in the Southwest. However, this provision is not included in the Senate bill and Senator Kennedy, who represents a state of predominantly private universities, is expected to attempt to block it in Conference.
College Costs
There was much concern nationally when the Congressman McKeon proposed penalizing colleges that raised their tuition by a percentage that was more than twice the consumer price index. Private institutions argued that this amounted to price control, did not take into account uncontrollable expenses, such as utilities and construction, and was unwarranted federal interference in private enterprise. Public institutions pointed out that they had no control over tuitions that were set by state legislators. California Community Colleges pointed out that our tuition was so low that an increase of only $3 per unit would put us in violation of the rule and it seemed counterproductive to penalize the least expensive schools under a provision that attempts to cut college costs! Since then, an exemption has been added for colleges that increase their fees less than $500 per year or are in the lowest tuition quartile for institutions of that type, both of which California community colleges meet. Although the Senate bill does not include this provision, the House feels very strongly about curtailing college costs and it is likely to be in the final bill.
Distance Education
Some of the restrictions on institutions offering large distance education programs have been eliminated and the distinction between telecommunications courses and correspondence has been clarified.
Elimination of the Pell Grant Tuition-Sensitivity Provision
The current law prohibits students at low-cost institutions from receiving the maximum Pell Grant. Since enacted, this has only affected California community college students and in 2001-02, 2002-03 and 2003-04 our students received a lower Pell Grant award than other students, creating one of the more publicized rationales for increasing the enrollment fee to $26 per unit. Elimination of the tuition-sensitivity calculation is in both the Senate and House bill, so seems likely to pass.
Federal Work-Study JLD Allocation
The amount of the college’s Federal Work-Study allocation that can be used to fund a Job Location and Development program is increased from 10% of the allocation up to $50,000 to 15% of the allocation up to $75,000.
Gear-Up and TRIO programs
These programs are reauthorized in both bills, but with increased accountability requirements.
Ineligibility for Conviction of Drug or Sexual Offense
Both bills amend the provision that prohibits students convicted of drug offenses to apply only to students who received that conviction while receiving federal student aid. The House bill also prohibits students with a conviction for a sexual offense from receiving federal student aid.
Increased Institutional Reporting Requirements
To provide more public information on the US Department of Education’s College Opportunity On-Line (COOL) Website, the House bill increases IPEDS reporting requirements to include information on institutional cost, financial aid recipients, faculty information, additional student demographics and other data.
Pell Grant Award Increases
The Senate bill proposes increasing the Pell maximum to $6000 beginning with 2006-07. The House bill would increase Pell to $5100 in 2006-07 with annual increases thereafter of $300 per year.
Pell Grant Eligibility Limited to 18 Semesters
Both bills limit students to 18 semesters of Pell Grant “without regard to whether the student is enrolled on a full-time basis” (3). While 18 semesters sounds like a long time, it includes all undergraduate terms the student attends, does not provide a pro-ration for less than full-time students and does not have a provision for appeals or special circumstances. For example, a half-time student who could only take 6 units per semester would only be eligible for Pell Grant funding for up to108 units over the 18 semesters. This provision penalizes students who have jobs, families or disabilities that prevent them from attending on a full-time basis. Most students in these situations who plan to attend a community college and transfer would lose their Pell Grant eligibility before being able to complete their 4-year degree. Students who need to take ESL or remedial classes would be at even greater a disadvantage.
Simplifying the FAFSA Form
Both bills create an E-Z FAFSA Form, similar to the E-Z tax return, with a minimum number of items to be completed by families that are eligible for welfare benefits, SSI benefits, food stamps or free school lunch programs. This simplifies the process for these families and greatly expands the number of applicants for whom financial assets are not counted in the need analysis formula.
Single Institutional Definition
Currently, proprietary schools have full benefits of higher education institutions only for the student aid programs under Title IV. The House bill would extend that eligibility to programs and grants in other Titles, such as Title III and Title V, except that proprietary schools would not be eligible “if such grants are awarded on any basis other than competition on the merits of the grant proposal or application” (4).
Student Consumer Information
In addition to the existing consumer requirements, the House bill requires
institutions to provide students with information on completion and graduation rates and policies regarding the acceptance of transfer credit.
Student Free Speech
In response to complaints that conservative political views are treated equitably on college campuses, the Senate and House bill reaffirm a “sense” of Congress that intellectual pluralism be evident in campus activities and the curriculum.
Student Loans
Loan limits are increased for first and second-year students and there are repayment deferments and cancellation benefits for students who go into nursing, active military, public service and teaching. Other changes concern reductions in subsidies and special allowances paid to lenders and guarantee agencies, the ability of the student to select a fixed or variable interest rate on consolidation loans and more flexibility for students in obtaining consolidation loans.
Transfer Credit
The House bill required colleges to evaluate all transcripts provided by incoming transfer students solely on the academic merit of the transcript, regardless of the accreditation status of the institution providing the transcript.
Year-Round Pell Grant
Both bills attempt to encourage students to accelerate completion of their program and graduate earlier by allowing more than one Pell Grant per year. However, the House bill restricts this to 4-year colleges that have a 30% graduation rate and 2-year colleges that have an above average graduation rate. This is beneficial to students but would require major reprogramming for college and the Department of Education computer systems.
Conclusion
This is just an overview of some of the major issues covered in the 300+ pages of each of the proposed bills. Congress is under political and financial pressures that will impact the final version of the Reauthorization Bill. Prior to Hurricane Katrina, the Education Committees were charged with finding $ 11 billion in savings in the Education budget. Much of that will come from reductions in subsidies and special allowances to lenders and guaranty agencies participating in the federal Stafford student loan program and a “pay-go” mandate that any proposals for new expenditures must be accompanied by a corresponding plan on how to generate the funds to pay for it. With the federal costs of hurricane recovery added to the mix, we are unlikely to see funding increases in existing programs and may have a hard time hanging on to the additional funding provided for in these bills. If you feel strongly about any of these proposals, now is the time to let your Congressional representatives know about it.
References
(1) Baum, Sandy, Ph. D, Trends in Student Aid 2004, College Entrance Examination Board, 2004
(2) Harter, Philip. J., “Assessing the Assessors: The Actual Performance of Negotiated Rulemaking”, New York University Environmental Law Journal, Vol. IX, 2000
(3) HR 609, Title I, General Provisions, Sec. 101(b)(1)(B)
(4) HR 609 & S 1614, Title IV – Student Assistance, Part A-Grants to Students, Sec. 401(g)(5)
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