UB Cost per Student	Proposed APR changes
College Access & Opportunity Act	California's Education Budget

The College Access and Opportunity Act

Synopsis of the bill
The actual bill as a PDF
COE's Study of the Possible Impact to TRIO
Article from the Chronicle of Higher Education
E-mail to COE requestion clarification of "novice" language in the bill
House Hearing Highlights Divisions Over How to Renew the Higher Education Act

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THE COLLEGE ACCESS & OPPORTUNITY ACT

[Download in MS Word]

• Millions of low and middle-income students today face the possibility of being denied access to a higher education. 

• An overwhelming majority of Americans believe future increases in federal higher education aid should go to expanding help for current and future college students, rather than continued subsidies to graduates in the workforce, such as higher income borrowers repaying their loans. 

• If current programs remain on autopilot, the opposite is likely to happen.  Subsidies to higher income graduates will consume billions of dollars that should instead be used to ensure access for incoming, low and middle-income students. 

• The independent General Accounting Office (GAO) has warned the cost of the federal loan consolidation program – which provides billions in subsidies to higher income individuals who are no longer students – will explode over the next several years.  Billions that should be used to expand access for students will instead be used for subsidies to non-students.  GAO has urged Congress to consider alternatives.

• The ballooning cost of fixed-rate consolidation loans is a threat to college access for low and middle-income students who haven’t received an education yet.  There is emerging bipartisan consensus on this point, despite rhetoric to the contrary from the Democratic Party leadership.

• Experts on both sides of the political fence have said Congress can protect incoming students by ensuring all future consolidation loans are based on variable interest rates, rather than a fixed interest rate.  This will preserve the benefits of the consolidation loan program without jeopardizing college access for low and middle-income students.

• Rank-and-file Democrats on the House Education & the Workforce Committee have introduced several bills that would ensure all future consolidation loans are based on a variable rate.  More than half of all Democrats on the committee (13 out of 22) have either introduced or co-sponsored bills that would make all new consolidation loans variable rate. 

• Committee Republicans will incorporate this bipartisan concept into fiscally responsible legislation that will restore fairness and expand access for incoming, low and middle-income students – the College Access & Opportunity Act.
  

Preview Summary: The College Access & Opportunity Act of 2004

The College Access & Opportunity Act will expand access to higher education for millions of low and middle-income students.  The bill will reauthorize the remaining portions of the Higher Education Act (HEA), including Title IV, which deals with student aid.  The House has already passed bills reauthorizing several other portions of the Higher Education Act.

The College Access & Opportunity Act will expand access to higher education for millions of low and middle-income students by:

• Strengthening Pell Grants, student aid, student access, and minority serving institutions.
• Reducing loan costs, fees, and red tape for students and graduates.
• Removing barriers for non-traditional students.
• Empowering consumers through “sunshine” and transparency in college costs & accreditation.

STRENGTHENING PELL GRANTS, STUDENT AID, STUDENT ACCESS, & MINORITY SERVING INSTITUTIONS

The College Access & Opportunity Act will:

• Provide extra Pell Grant aid for high-achieving first and second-year students.  To help lower income students adjust to college without being forced to take on additional financial burdens and encourage needy students to give college a try, President Bush and House Republicans would provide extra Pell Grant aid – over and above the current maximum award – to lower income first- and second-year students through a proposal dubbed "Pell Grants Plus."  The bill will provide the additional aid to lower income students who have completed a rigorous high school curriculum through the State Scholars Program.  See the summary of H.R. 3894, the Pell Grants Plus Act, introduced by Reps. Max Burns (R-GA) and Ric Keller (R-FL).

• Provide year-round Pell Grant aid for students attending school throughout the year.  The bill will provide year-round Pell Grant funding for students accelerating their course work. 

• Remove an incentive for colleges to raise tuition by repealing Pell Grant "tuition sensitivity."  A current federal rule needlessly limits the amount of Pell Grant aid a student attending a very low-cost institution can receive.  In addition to hurting students at such schools, this rule unintentionally creates an incentive for colleges and states to increase tuition.  The bill will repeal the tuition sensitivity requirement.     

• Phase out unfair advantages in campus-based student aid.  An unfair share of federal campus-based aid currently goes to some older, higher-cost institutions because of an outdated federal formula used to distribute the money.  The bill will phase out the current formula to ensure fairness for lower-cost institutions and the students who attend such schools.  As the New York Times noted recently, "[t]he federal government typically gives the wealthiest private universities, which often serve the smallest percentage of low-income students, significantly more financial aid money than their struggling counterparts with much greater shares of poor students."  (Greg Winter, "Rich colleges receiving richest share of U.S. aid," New York Times, November 9, 2003)  The National Association of Student Financial Aid Administrators (NASFAA), which represents the student financial aid interests of most U.S. colleges, is urging Congress to end the special subsidies.  And in his 2005 budget request, President Bush called on Congress to provide fairness for low and middle-income students.

• Strengthen federal college access programs (TRIO and GEAR UP).  As originally proposed in H.R. 3039, the bill will reauthorize and strengthen all federal college access programs for low and middle-income students, including TRIO and GEAR UP.  President Bush has asked Congress to continue to provide record funding for these programs for FY 2005 (TRIO is receiving a record $832.6 million in federal appropriations this year, and GEAR UP is receiving a record $298.2 million).  The bill would authorize and allow Congress to build on these record investments.  The bill will also increase the minimum grant levels for TRIO programs; provide more flexibility for institutions to serve different populations at multiple campuses; and ensure the unique needs of low-income working adults can be successfully addressed through these programs.  To create a level playing field and ensure fairness for new institutions seeking to compete for federal TRIO funds, the bill will set aside 10% of TRIO funding in a reserve account for novice, quality applicants.  If an insufficient number of quality, novice applicants qualify for and receive grants, the reserve funds will be released to other institutions participating in TRIO.  The College Access & Opportunity Act also clarifies that GEAR UP grants are provided for 6 years, ensuring services for students are not cut short, and allows GEAR UP funds to be used to help students make the transition from high school to college.

• Strengthen minority serving institutions.  Minority serving institutions such as Historically Black Colleges & Universities (HBCUs) and Historically Black Graduate Institutions (HBGIs), Tribally Controlled Colleges and Universities, and Hispanic Serving Institutions (HSIs) play a key role in providing access to higher education for American students.  The College Access & Opportunity Act will reauthorize and strengthen these programs, which are receiving historic levels of federal funding under President George W. Bush.  The bill will make it easier for minority serving institutions to use technology to improve education by providing such schools with the flexibility to use federal funds to develop or improve facilities for Internet use or other distance learning capabilities.  By giving minority institutions the freedom they are seeking to use their funds to acquire technology, the bill will encourage innovation and new opportunities for student learning.  The College Access & Opportunity Act will also increase the minimum grant for HBCUs and simplify the grant application process for Tribally Controlled Colleges and Universities.  The bill will also reduce red tape for Hispanic Serving Institutions by eliminating the two-year lapse between grant applications Hispanic Serving Institutions are forced to contend with under current law. 

REDUCING LOAN COSTS, FEES & RED TAPE FOR STUDENTS & GRADUATES

The College Access & Opportunity Act will:

• Reduce loan origination fees for students.  The bill will gradually reduce origination fees to 1% for both the FFELP and Direct Loan programs.  The fees will be phased down gradually over the life of the bill.  Consolidation loans will no longer be given special exemptions. 

• Update loan limits for first and second-year students without increasing overall student debt.  Loan limits for first-year students were last adjusted in 1986, and for second-year students in 1992.  The bill will allow moderate increases in loan limits for first and second-year students, to give students greater access to loans at the lowest possible interest rates.  First-year student limits will increase from $2,625 to $3,500.  Second-year student limits will increase from $3,500 to $4,500.  However, aggregate undergraduate borrowing limits will remain unchanged at $23,000, ensuring students are not saddled with unnecessarily high debt loads.  Graduate unsubsidized annual borrowing limits will increase from $10,000 to $12,000. 

• Allow students to continue to take advantage of low, market-based interest rates.  Students today are benefiting from the lowest student loan interest rates in history.  The bill will ensure they can continue to take advantage of such low rates by preserving the current successful variable interest rate structure beyond 2006, when the current market-based rate (currently about 3.42%) is scheduled to be replaced by an artificial, arbitrary rate fixed at 6.8%.  If this change is not enacted, students could see their interest costs double overnight beginning in 2006.  The bill will ensure all federal student loans are based on a variable-rate to ensure all students and borrowers can take advantage of low, market-based interest rates. 

• Allow graduates to consolidate loans at low, market-based interest rates.  As recommended by the independent General Accounting Office (GAO), the interest rate for consolidation loans would be changed from fixed to variable, affording consolidation loan borrowers the same low rates now available on other student loans.  Borrowers would be protected from excessively high interest rates through the repayment period by an interest rate cap (at 8.25%) and ensured access to the lowest available rates, such as the 3.42% borrowers are paying today.  The variable-rate structure gives borrowers the ability to repay loans in a more timely fashion and take advantage of low market rates.  This change will also ensure billions of additional dollars will be available in future years to expand college access for low and middle-income students.

• Allow consumers to shop for the best deals on consolidation loans by eliminating the "single-holder" rule.  The bill will enhance the benefits of the federal consolidation loan program by repealing a federal rule that limits consumers' ability to shop for the best deal for a consolidation loan.  The bill will repeal the "single holder" rule, which limits consumers’ ability to consolidate with the lender of their choice by requiring consumers who have all of their loans held by a single lender to consolidate with that lender, even if they could obtain better terms and service elsewhere.  Borrowers will now have the ability to shop around with other lenders for the best terms and services, while ensuring the original holder of their loans can and must compete to retain the loan.  The bill will also make common-sense technical corrections to current rules on consolidation loans – encouraging rehabilitation of defaulted loans, which allows a borrower to regain good standing and clear up negative credit history, and repealing provisions that allow spousal consolidations that create financial and legal havoc for borrowers (spouses will still individually be fully eligible for consolidation loans).

• Protect borrowers' credit history by requiring lenders to report to all national credit bureaus.  For many students and graduates, consecutive on-time monthly student loan payments can help to build a strong credit history.  A strong student loan repayment history can help borrowers qualify for lower-cost financing options, improved benefits, and even a first mortgage for college graduates who dream of owning a home.  The bill will require lenders to report to all national credit bureaus to ensure students and graduates will be able to take full advantage of the good credit history they have earned through repayment of their federal student loans.

• Improve repayment options for borrowers having trouble.  The bill provides an interest-only repayment plan for borrowers who are having trouble meeting their student loan repayment obligations.

• Close loopholes to protect taxpayers and students.  The bill will close a loophole in current law that U.S. News & World Report recently reported results in “windfall profits" with little or no return to students and taxpayers.  "The subsidy guarantees lenders a return of 9.5 percent on certain loans; that's quite a bonus at a time when most students are paying only about 3.5 percent in interest.  Lawmakers thought they had done away with the subsidy a decade ago, but some lenders discovered that by exploiting an Education Department ruling and using creative financing, they could issue a nearly infinite number of subsidized loans," the magazine reported (Barnett, Barnes, Knight; "Big Money on Campus," October 27, 2003).  The bill will close the loophole, saving taxpayers millions annually and freeing up money that can be used to expand college access for needy students.  The bill accomplishes this in a careful manner that should not disrupt outstanding tax-exempt bond issuances.

• Reform federal income guarantees for lenders.  To create savings that can be used to expand college access for low and middle-income students, the bill will reform so-called “floor income” guarantees for lenders.  The bill will specify that excess interest earnings must be returned to the government when they exceed a certain amount (0.5%).  The Congressional Budget Office (CBO) estimates that by reforming this aspect of current law – and bringing equity into the system for all involved – savings will be generated that can be used to improve access and fairness for middle and low income students struggling to attend college.

• Help to ensure students receive student aid quickly.  As originally proposed in the bipartisan FED UP bill, the bill will extend incentives for institutions to keep their student loan default rates low and allow students to receive loan funds faster.  Schools with default rates under 10% for three consecutive years will be permitted to waive burdensome federal rules, including a rule requiring them to wait 30 days before providing loans to first-time borrowers who are first-year students. 

• Preserve the balance between traditional and direct student loans.  The bill will maintain the balanced approach between direct lending and traditional lending adopted by the Bush administration, which has coincided with the lowest student loan interest rate in history.  The bill would preserve both the FFEL and Direct lending programs.

REMOVING BARRIERS FOR NON-TRADITIONAL STUDENTS

For many non-traditional college students, alternative postsecondary education options such as community colleges, degree granting or certificate programs, proprietary schools, and distance learning programs provide an important alternative gateway to a college education.  The College Access & Opportunity Act will:

• Repeal the unfair "90-10" rule to ensure greater fairness for low-income, middle-income, and minority students.  Current law requires proprietary schools to demonstrate that 10 percent of their revenue is derived from sources other than federal student aid funds.  There is no evidence this requirement reduces fraud and abuse, but there is significant evidence it reduces college access for many of the nation’s most vulnerable students – raising costs and forcing many schools out of inner cities, where most students are fully funded with federal aid.  The rule creates disincentives for schools to serve students who tend to be most in need of financial help.  The bill would eliminate the 90-10 rule, as originally proposed in H.R. 3039, authored by Rep. Tom Cole (R-OK).

• Allow all eligible schools to compete for federal funding.  As called for in H.R. 3039, the bill will update technical legal definitions within the Higher Education Act to allow all eligible institutions to compete for available funding as long as they are two-year degree-granting institutions.  The bill will simply combine the two current institutional definitions into one single, straightforward definition.  No institutional sector will be guaranteed priority under the law; institutions will only be provided with the ability to compete on an equal basis for federal funding.  Proprietary schools competing for and receiving grants as a result of this provision will be required to use the funds solely for student-related services.

• Repeal unfair barriers to distance education.  Current federal rules on schools limit the number of students who can be enrolled in distance education, and the number of courses an eligible institution may offer via distance education.  As proposed originally in H.R. 3039, the bill will repeal this so-called “50% rule” as it pertains to instruction by telecommunications.  Financial rules, administrative capability rules, and accreditation safeguards would remain in place to prevent fraud and abuse.  By removing unnecessary barriers to distance education, the bill will give schools the flexibility to increase the use of technology and provide students with new postsecondary options.

EMPOWERING CONSUMERS (PARENTS & STUDENTS) THROUGH “SUNSHINE” & TRANSPARENCY IN COLLEGE COSTS & ACCREDITATION

The College Access & Opportunity Act will:

• Give consumers more information about what they’re getting for their money.  Colleges are currently required to report a significant amount of data to the federal government, but the information is not available to students and parents in an easy-to-use format.  The bill will require the U.S. Department of Education to use this information to create a "College Consumer Profile" and make this information available to the public in a readable, understandable, consistent, and clear format so students and families can make more informed choices in the college marketplace. 

• Shine a spotlight on excessive tuition hikes.  The bill will publicly identify federally-funded institutions that repeatedly engage in excessive tuition hikes, giving consumers an index they can use to track tuition increases and make more informed decisions in their college spending.  Institutions that increase tuition and fees at more than twice the rate of inflation over a three-year interval will be publicly identified, as originally proposed by Rep. Howard P. “Buck” McKeon (R-CA) in H.R. 3311.  The only federal “sanctions” such institutions will face under the College Access & Affordability Act, however, will be the light of public scrutiny.  The current bill will not authorize the federal government to withhold a percentage of such schools’ campus-based federal funding.

• Make accrediting agencies more accountable by making information more public.  A 2002 study by the American Council of Trustees & Alumni (ACTA) found many accrediting entities do a poor job of maintaining academic quality and holding down costs.  "[S]tudents can now graduate from accredited schools with an education in name only," noted ACTA's George Leef recently.  Accrediting agencies are currently required under federal law to provide limited information about their activities to the public, but only upon request.  The bill will make the accreditation process more transparent by giving students, parents, and the general public more direct access to such information, helping to ensure they know what they’re getting for their money.  The bill will help to ensure policies, actions, and activity by accrediting entities are publicly disclosed. 

• Make transfer of credit policies public.  With recent data showing more than 50 percent of students attend multiple institutions of higher education, it has become increasingly important for students to have the flexibility to transfer their credits from one school to another.  To make it more difficult for academic credits earned by students to be wrongly denied for territorial or political reasons, the bill will simply require institutions to have a transfer of credit policy, make that policy public, and follow that policy, as proposed originally in H.R. 3311.  The College Access & Opportunity Act also ensures credits are not unfairly and arbitrarily denied based on the accreditor of a college or university where the credits being transferred were earned, so long as the accreditor is recognized by the U.S. Secretary of Education.

ADDITIONAL FEATURES

The College Access & Opportunity Act will:

• Clarify federal student aid rules on drug-related offenses.  The bill will clarify current federal law prohibiting students from receiving federal grant, work or loan assistance if they have been convicted of an offense under federal or state law involving the possession or sale of a controlled substance.  The bill will clarify that the law applies to students who are currently enrolled, receiving federal Title IV aid, and convicted of the offense.

• Repeal duplicative, expired, and/or unnecessary programs.  The bill will repeal nine current programs previously authorized under the Higher Education Act that are duplicative and/or unnecessary or have expired and are no longer needed.  A number of expired provisions in current law will also be repealed.

• Support efforts to prevent Pell Grant fraud.  House Republicans, led by Rep. Sam Johnson (R-TX), have introduced the Student Aid Streamlined Disclosure Act (H.R. 3613), legislation that would strengthen the popular Pell Grant higher education program by reducing fraud in the program that cheats America's most disadvantaged students.  The College Access & Opportunity Act complements that effort.  While protecting taxpayer privacy, H.R. 3613 would require the federal government to improve the verification process for Pell Grant awards through an IRS data match.  In addition to helping to reduce the under-awarding of Pell Grant benefits for students who actually qualify for more generous awards, the proposal could free up as much as $340 million that Congress could use to expand the number of needy students legitimately receiving Pell grants, increase the maximum Pell Grant award for students, or reduce the current budget shortfall in the Pell Grant program for future recipients.

• Promote financial and economic literacy.  Throughout the bill, program uses of funds will be expanded to include education or counseling designed to improve the financial and economic literacy of students and, where appropriate, their parents. 

• Reduce red tape for schools.  As included in the bipartisan FED UP reform legislation from 2002 – reintroduced last year as H.R. 12 – the bill will contain a number of provisions making technical corrections and improvements to current law as requested by American colleges and universities through the FED UP project, an initiative led by Rep. Howard P. “Buck” McKeon (R-CA) and the late Rep. Patsy Mink (D-HI) that allowed school officials and students to submit recommendations over the Internet for reducing federal red tape and making common-sense changes to current higher education law. 

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House Introduces New HEA Bill With New Attack on Prior Experience

On Wednesday, May 5th, Congressman Howard “Buck” McKeon (R-CA-25)—Chairman of the House 21st Century Competitiveness Subcommittee—introduced The College Access and Opportunity Act of 2004 (H.R. 4283).  This is a comprehensive bill that reauthorizes the remaining portions of the Higher Education Act (HEA), including Title IV and other student aid issues.  The bill also incorporates portions of the Expanding Opportunities in Higher Education Act (HR 3039), which was introduced in September of 2003 and included language that impacted TRIO.  You can download the new bill at http://edworkforce.house.gov/issues/108th/education/highereducation/highereducation.htm

BAD NEWS!

The bill includes language that sets aside 10% of the TRIO annual appropriations for novice applicants.  This language erodes the prior experience provision and rewards “lack of experience” over “experience”!  The provision will not strengthen the TRIO Programs nor will it expand college access for low-income, first-generation college, and disabled students.

•           In this climate of extreme fiscal constraints and an FY2005 Budget Resolution that essentially freezes spending for all non-Defense, non-Homeland Security programs, a special set-aside of 10% of TRIO funds for novice applicants WILL CUT funding for proven, existing TRIO Programs. 

If you assume level funding for TRIO (at the FY2004 level of $832.6 million) for the next 3 years, here’s what the impact will be on the next competitions for:

SSS Competition (Fall 2004): Of the 936 existing SSS grantees, 300 existing SSS grantees (32%) WILL BE CUT and 62,000 SSS college students WILL LOSE services;

Talent Search Competition (Fall 2005): Of the 471 existing Talent Search grantees, 205 existing Talent Search grantees (43%) WILL BE CUT and 167,000 Talent Search middle and high school students WILL LOSE services;

 EOC Competition (Fall 2005): Of the 138 existing EOC grantees, 60 existing EOC grantees (43%) WILL BE CUT and 91,000 EOC adults WILL LOSE services;

Upward Bound Competition (Fall 2006): Of the 819 existing UB grantees, 200 existing UB grantees (24%) WILL BE CUT and 15,000 UB high school students WILL LOSE services;

UB Math/Science Competition (Fall 2006): Of the 131 existing UB Math/Science grantees, 31 existing UB Math/Science grantees (24%) WILL BE CUT and 1,700 UB Math/Science high school students WILL LOSE services;

McNair Competition (Fall 2006): Of the 179 existing McNair grantees, 42 existing McNair grantees (24%) WILL BE CUT and 1,000 McNair college students WILL LOSE services;

•           Since institutions applying for a “new” TRIO Program have a better chance of being funded (38%) than in any other discretionary program in the Office of Postsecondary Education in the Department of Education, a special set-aside for novice applicants is unnecessary. Four Hundred and fifty-two (452) “new” TRIO projects have been funded within the last four years. 

WHAT YOU CAN DO!

Some of you have sought guidance as to how to assure that this 10% set aside for novice applicants is struck from the McKeon bill.  The Council and the TRIO Community’s efforts at this time must be directed to assuring that a majority of members on the Subcommittee (at least 15 of the Members) will vote to strike this provision when the bill goes to mark-up.  Click here to see who sits on this Subcommittee

http://edworkforce.house.gov/members/108th/mem-21st.htm

Please have your Member of Congress contact Mr. McKeon (if they are Republican) or Mr. Miller (if they are Democrats) and voice their opposition to this 10% set aside provision.   Your Member should also contact other Congressmen/Congresswomen from their states who sit on the Subcommittee.   Individuals outside Mr. McKeon’s district are not going to change his view on this matter but other Members of Congress can! You can click here to contact your Member http://www.house.gov/

Thanks for your efforts!

Debra Henderson
V.P. of Public Policy
Council for Opportunity in Education

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From The Chronicle of Higher Education, Thursday, May 6, 2004

Legislation to Renew the Higher Education Act Is Introduced in U.S. House
By STEPHEN BURD

Washington

The Republican leaders of the education committee in the U.S. House of Representatives introduced legislation on Wednesday night to extend the Higher Education Act for the next six years.

The bill, known as the College Access and Opportunity Act, would make significant changes in the federal student-loan programs. It would, for example, raise the amount of money that first- and second-year students may borrow from the loan programs, and would reduce the origination fees that students must pay to obtain their loans.

To help offset the costs of those proposals, the lawmakers included a

controversial provision designed to diminish the appeal of the federal loan-consolidation program, which allows borrowers to combine and refinance their student loans (The Chronicle, May 7).

In introducing the bill, Rep. John A. Boehner, the Ohio Republican who is chairman of the House Committee on Education and the Workforce, said the billions of dollars that the government provides in subsidies each year to keep the costs of consolidated, fixed-rate loans cheaper for college graduates would be better spent providing more benefits to current and future students.

"Millions of low- and middle-income students today face the possibility of being denied access to a higher education," said Mr. Boehner. "These students and their families should be first in line when federal higher-education aid is increased. The College Access and Opportunity Act is fiscally responsible legislation that will restore fairness and expand access for incoming low- and middle-income students -- the very students the Higher Education Act was created to serve."

But on Wednesday night, the panel's Democratic leaders expressed opposition to the bill. They said that a fixed rate on consolidation loans had helped make repayment more manageable each year for hundreds of thousands of borrowers who are buried in debt. The change to a variable rate, they said, could more than double the interest paid by borrowers over the life of their loans (The Chronicle, March 26).

"At a time when college costs are skyrocketing, Republicans have introduced legislation which will drive up the price of college by thousands of dollars for low- and middle-income students," said Rep. Dale E. Kildee of Michigan. "With more and more families struggling to pay for college, this legislation represents the wrong priorities at the wrong time."

Mr. Boehner plans to hold a hearing on the legislation next week. Soon afterward, the House panel's subcommittee on higher education will take up the bill. Meanwhile, it is unclear whether a Senate version of the bill will be introduced this year.

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From: Ferguson, David
Sent: Monday, May 10, 2004 12:56 PM
To: 'Debra Henderson (deb@hqcoe.org)'
Cc: 'Muriera, Ron'; 'Park, Cynthia'; Bee, Allan
Subject: College Access and Opportunity Act

At our NorCal WESTOP meeting discussion of the College Access and Opportunity Act, the question was raised regarding the definition of "novice." In reviewing the draft of the legislation, I cannot find a definition and was wonder about your read.

Does "novice" mean an institution applying for a TRIO program that does not currently have the program up for competition? Or does "novice" mean an institution without any TRIO programs?

NOTE: As of today the response has been that Ms. Henderson is looking into it.

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The Chronicle of Higher Education

Thursday, May 13, 2004

House Hearing Highlights Divisions Over How to Renew the Higher Education Act
By STEPHEN BURD Washington

Republican and Democratic leaders of the education committee in the U.S. House of Representatives clashed on Wednesday over whether legislation that GOP lawmakers introduced last week to renew the Higher Education Act would do enough to help financially needy students gain access to college.

At issue was the decision by the committee's Republican leadership to keep the bill (HR 4283), known as the College Access and Opportunity Act, "cost neutral," meaning that any money added to one federal student-aid program in the bill would have to be offset by cuts to another such program.

At a hearing of the committee, its chairman, Rep. John A. Boehner of Ohio, said that with the large federal budget deficit, he had no choice but to act responsibly and "make hard decisions."

Despite the restriction on costs, he said he was confident that the bill would "expand access to higher education for millions of low- and middle-income students." It would do that in part, he said, by taking billions of dollars that the government provides in subsidies to borrowers who are long out of college and redirecting that money to help current and future students.

The bill would, for example, raise the amount of money that first- and second-year students may borrow from the federal loan programs, and would reduce the origination fees that students must pay to obtain their loans. To pay for those proposals, the lawmakers included a provision in the bill that would make the loan-consolidation program less appealing to borrowers (The Chronicle, May 7).

"I firmly believe current and future students should be our No. 1 priority in distributing federal higher-education aid," Mr. Boehner said.

But the committee's Democratic leaders said that the panel should not have to make such trade-offs. If the Republicans cared as much about education as they do about tax cuts and other priorities, the Democratic lawmakers said, they would be able to help current and future students without harming hundreds of thousands of existing borrowers who are buried in debt.

"I find it rather fascinating that when it comes to education, we're in a budget-neutral situation," said Rep. George Miller of California, the top Democrat on the panel. "We're not in a budget-neutral situation with the military budget, the agriculture budget, and the transportation budget.

"So they have obviously decided that it is a higher priority to find money for tax cuts and for all these other purposes," Mr. Miller continued, "but it's not a high priority of the Republican leadership here to find money for the education of America's young people."

Pell Grants

Mr. Miller and other Democrats on the committee also took the Republican lawmakers to task for proposing to keep the authorized level for the maximum Pell Grant, set by Congress in 1998, at $5,800 over the next six years.

The maximum Pell Grant that is authorized in the Higher Education Act for each fiscal year is mostly symbolic because the actual maximum award is set annually in appropriations bills. For example, the maximum grant is now $4,050, even though it is authorized to be $5,800.

Republicans on the committee said that it is unnecessary to raise the authorized level since the appropriations have not come close to reaching the current authorized maximum. Mr. Boehner said that increasing the maximum grant in the bill would be dishonest because Congress would not be able to finance it.

But Mr. Miller said that raising the level would show that Congress is committed to the program. "We should be saying [that] this is what the country should be doing," he said. "That's why we are policy makers."

Some of the college leaders and advocates for students who testified at Wednesday's hearing agreed.

"You ought to set the bar so it continues to move upward," said Charles B. Reed, chancellor of the California State University System.

Democratic Divisions

While Democratic lawmakers on the committee were unanimous in criticizing the Republicans as stingy, they were divided over the bill's proposed changes to the loan-consolidation program.

Under the bill, borrowers who seek consolidation loans would no longer be able to lock in fixed interest rates for up to 30 years, as they are able to do now. Instead, the borrowers would be charged the same rate as all other student-loan recipients are charged in a given year. Currently, that rate varies from year to year, based on market conditions, and is capped at 8.25 percent.

The panel's Democratic leaders oppose the plan. They cite a report by the nonpartisan Congressional Research Service that states that a switch to a variable interest rate could more than double the interest paid by the average borrower over the life of his or her loan.

But a Democrat on the committee -- Rep. Robert E. Andrews of New Jersey -- disagrees with his colleagues. He has introduced his own bill (HR 4102), which would replace the fixed rate with a variable rate.

While his bill is similar to Mr. Boehner's, it would lower the interest-rate cap for borrowers with heavy debt burdens. Those borrowers who are putting at least 8 percent of their annual income into loan repayment would get a variable-rate loan with a lower cap than 8.25 percent (The Chronicle, April 30).

Mr. Andrews said he believes his bill could bring together Democrats and Republicans who are seeking a serious way to deal with the issue. "I have never been involved in a legislative process that doesn't involve compromise," Mr. Andrews said at the hearing.

Nine of the 21 other Democrats on the committee have agreed to cosponsor Mr. Andrews's bill. But there are divisions on the Republican side as well. At least a half-dozen Republicans oppose shifting to a variable rate in consolidation, Congressional observers say.

At the hearing, Mr. Boehner tried to draw support to the consolidation proposal in his bill. He presented a new report by the Congressional Research Service that he said shows that variable-rate consolidation loans tend to cost less for borrowers.

The analysis found, he said, that borrowers taking out consolidation loans in 13 of the 18 years since 1986, when Congress created the refinancing program, would have paid less over the life of their loans under a variable rate than a fixed one.

The panel's Democratic leaders did not comment on the study, as they first learned about it at the hearing.

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