Prospects for action on FY 2003 Labor-HHS-Education Appropriations before recess for the 2002 Congressional elections remain poor. The Senate Appropriations Committee approved its bill, S. 2766, on July 18th, but the bill has yet to appear on the Senate floor. The House has not passed or even marked up a Labor-HHS-ED bill in subcommittee because of disputes between conservative and moderate Republicans regarding how much to spend on education, with conservatives supporting the President's budget and moderates seeking additional increases.
Congress has so far passed two continuing resolutions (CR's) providing FY02 funding levels for federal departments and agencies for which no FY03 appropriations have been made through Friday, October 11th. However, what will happen after next Friday remains unclear. An additional short-term CR is expected.
Education advocates have been campaigning for increased funding and opposing long-term CR's that would retain the status quo. COHEAO participated in efforts by the Committee for Education Funding and the Student Aid Alliance to support increasing the Perkins Capital Contribution to $140 million for the year and increasing reimbursements to $100 million. A letter to that effect was distributed this week to Congress.
House speaker Dennis Hastert (R-IL) has indicated that he would like to complete homeland security legislation this year, but recognized that the end of the session would be determined by the outcome of the November elections and the ability of the Senate to move legislation. He stated that the House could reconvene for one day each week to pass a series of additional seven-day CRs. When asked about this possibility, House Minority Leader Richard Gephardt (D-MO) accused Republicans of ignoring the economy and challenged GOP leaders to schedule debates on unemployment insurance, prescription drugs and education funding.
Senate Majority Leader Tom Daschle (D-SD) is threatening to keep the Senate in session until the November 5th elections and then reconvene immediately following the elections to work on any unfinished business.
Republican leaders in both the House and the Senate have indicated that they would support a long-term CR either before or after the November elections that would last until February or March. However, appropriators generally are against this idea because they believe it would damage agencies and cause logistical problems next year. Daschle has said that a continuing resolution that would keep the government operating well into the current fiscal year should provide funding at an annual rate of $768 billion. However, the Republicans and the White House have set a $759 billion limit.
The Senate Appropriations Committee completed its version of the FY03 Labor-HHS-Education appropriations bill, S. 2766, on July 18, but was unable to complete floor action. The financial aid features of the bill are as follows:
The much-delayed FY 2002 Supplemental Appropriations bill, H.R. 4775, which includes $1 billion towards the $1.3 billion Pell Grant shortfall, cleared the House and Senate and was signed by the President August 2. The $28.9 billion was repeatedly delayed after the Bush Administration objected to additional spending included in the Senate version of the bill. The final conference agreement reduced funding under the bill from over $31 billion to a level acceptable to the Administration.
The reauthorization process is underway with a series of four hearings taking place in the House Education and Workforce Committee in September and October. The hearings were on HBCU's and institutional aid (Title III), college costs, accreditation, and teacher training (Title II). In addition, the Committee has formally requested that interested parties submit reauthorization proposals by the end of 2002.
The Senate is not yet scheduling hearings, since its Committee agenda is being tied up with other issues, such as education research and the Individuals with Disabilities Education Act.
The Bush Administration is working on its proposals, although nothing is apparently close to final. The Administration wants to simplify the financial aid system and is concerned that Perkins requires a separate administrative track at the Department of Education.
Most higher education community associations are working on reauthorization proposals, with widely varying degrees of progress. The American Council on Education is working on a community-wide proposal. COHEAO plans to participate in that effort, which is just beginning.
So far, no association has proposed formally, or informally that we are aware of, that Perkins Loans be eliminated. More likely are proposals asking for increased loan limits for Perkins and for greater flexibility in financial aid offices to shift Perkins funds into grant aid in limited instances.
Conferees on bankruptcy reform legislation (H.R. 333) reached an agreement on a highly controversial provision relating to abortion that was expected to allow both the House and Senate to vote on a conference report before the August recess. But some anti-abortion House members refused to go along with the compromise and stalled the legislation until September. The bill includes a provision that makes non-federal education loans made or guaranteed by a for-profit entity non-dischargeable, bringing the treatment of alternative loans into conformance with the treatment of Stafford loans.
The legislation was passed early in 2001 by the House and Senate, but a conference committee couldn't work out a final version. The September 11 attacks and the economic recession sapped interest in stiffening bankruptcy laws for most of this year, but a final push was launched in July. With the economic problems and an election imminent, the bill still seems unlikely to pass, despite the fact that large majorities in both the House and Senate support it.
The bill would require many people to file for bankruptcy under Chapter 13 and pay off their debts on a schedule on March 1st and July 17th, respectively. Currently, most debtors can file under either Chapters 13 or 7-the latter of which allows debtors to erase almost all of their debts, including credit card debt.
Two hearings were held in September, on in the House and one in the Senate, on tracking international students in higher education. The hearing was a follow up to hearings on the topic last fall, just weeks after the terrorists attacks of September 11th. It was later revealed that 2 out of the 18 terrorists entered the U.S. through student visas.
One purpose of the hearings was to focus on whether or not SEVIS, a new $37 million government system for tracking foreign students, would be operational by January 30, 2003, as mandated by Congress. Under the new system, colleges would provide detailed information on their foreign students and this information would be analyzed along with information provided by both the State Department and the Department of Justice.
Janis Sposato of INS indicated that the SEVIS system would be operational by January 1st. However, ACE President David Ward and Senior Vice President Terry Hartle expressed concern that there is not enough time for college officials to be properly trained on how to use the student monitoring system prior to the January 30th deadline. [COHEAO signed onto Hartle and Ward's testimony, along with a number of other higher education organizations.] The INS testified that it might be unrealistic to believe that they will be able to fully train college officials by January 30th, but stated that there would be additional training offered in the spring of 2003.
There is concern over the fact that the SEVIS system only monitors full-time students since visitors from other countries with B-visas would be able to enroll in part-time courses in the U.S. without being tracked by the SEVIS system. Members of Congress indicated sympathy with the colleges' position and stressed the need to make sure that all college officials are properly trained.
The low interest rates for Stafford and PLUS loans have resulted in an increase in FFELP loan consolidation. This is apparently due to intensive direct marketing efforts by certain companies that specialize in Consolidation loans. Direct Stafford/PLUS Loan consolidation has dropped compared to 2001. Perkins Loans are reportedly being repaid at a high rate due to inclusion in consolidation. The Department of Education has informally noted that the law states that Perkins Loans do not count as a second loan holder for purposes of complying with the FFELP one-holder rule. (Only Part B loans count.)
The Department has also said informally that it will consider the unusual interest rate environment and the resulting increase in consolidation when considering excess holdings in an institutions Perkins loan fund.
Marketers of consolidation loans are continuing a push begun last year for repeal of the single-holder rule. Rep. Ralph Regula (R-OH) has legislation, H.R. 3273, that would repeal the single-holder rule, as does Sen. Mary Landrieu (D-LA), with S. 2650. Chances of passage have declined as time has passed, however.
Three university presidents and a university researcher all testified Thursday that college prices are misunderstood by the public and warned that costs of education are outstripping student tuitions. They also made the point that they don't really expect many students to pay the nominal tuitions - the "sticker price" -- charged by colleges and universities.
The testimony occurred in the second of a series of hearings on reauthorizing the Higher Education Act held by the House Education and Workforce Committee. Members of the Committee in attendance asked a few tough questions, but for the most part expressed praise for the job the universities do.
Gordon Winston, a professor of economics at Williams College in Massachusetts, has conducted some economic studies of college cost trends, where he discovered that higher education is different economically from ordinary businesses. He said the most basic and odd difference is that colleges sell their product to student customers for a price that doesn't come close to covering the cost of production.
Winston and other witnesses said, in response to questions, that it's important to remember that the actual cost is far less than most realize, and it is important to explain this to the public so that the low-income students realize they can afford college.
The House Subcommittee on 21st Century Competitiveness held a hearing to begin discussions on a fairly contentious issue that will likely arise in the upcoming higher education reauthorization. The issue is determining the appropriate role of accreditation to assure quality and accountability in postsecondary education. Subcommittee Chairman Buck McKeon said that the purpose of the hearing was to determine if the assumption that an accredited college or university provides a quality education is accurate. He questioned whether some accreditation agencies impose standards on institutions that have nothing to do with academic quality.
One reoccurring theme brought up by several Subcommittee members, including Rep. Vernon Elhers (R-MI), was the problem of grade inflation. Hank Brown, a former senator and representative from Colorado, agreed that grade inflation has gone unchecked by accreditors and argued that the current system of accreditation does not ensure quality. Brown proposed that Congress give states (or make it clear that this is already permissible) the ability to set up their own accreditation systems. Brown believes that states have a direct interest in their institutions' quality and, therefore, would provide a stronger system of accreditation than nongovernmental entities.
McKeon indicated that this issue would be the subject of future hearings before next year's reauthorization of the Higher Education Act takes place.
Senior Republican Rep. Tom Petri (R-WI) introduced legislation this week to remove accreditation as a requirement for educational institutions to participate in the Title IV student financial aid programs. The bill, H.R. 5501, is viewed as a clear indication of an amendment to the Higher Education Act likely to be pursued by Petri next year.
In introducing the bill, Petri suggested that, in essence, that he had lost confidence in the accreditation process.
Sen. Judd Gregg (R-NH), ranking Republican on the Health, Education, Labor and Pensions Committee, introduced a version of the FED-UP Technical Amendments in September. The bill contained many of the provisions of House introduced in the spring and defeated on the House floor in July. The bill is S. 2602. It seems unlikely to pass this year.
The House Republicans have not completely given up on trying to pass Rep. McKeon's original FED UP bill, H.R. 4866, but it has not been scheduled for floor action.
Gregg included a provision extending Provisions that extend language in the Higher Education Act which allow schools to waive the 30-day delay on providing loans to first time borrowers and first time students as long as school default rates remain under 10 percent. It also would allow under 10 percent default rate schools to disburse loans in a single disbursement. However, the cost of the extenders for one year was calculated at $10 million, and no offsets were found.
The Career College Association has withdrawn from the American Council on Education.. The dispute involves several issues, including credit transfers from trades schools to four-year colleges. CCA wants the ACE to support such transfers, and plans to make that issue a major Higher Education Act reauthorization request. ACE and the traditional colleges and universities are resisting such a proposal, saying it should not be mandated by federal legislation.
CCA is not urging its members, which may belong separately to the American Council on Education, to quit that group.