Council on Undergraduate Research

HEA Reauthorization August 2014 Update

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LEGISLATIVE UPDATE

Higher Education Act

 

August Update

 
Prepared by:
 
Washington Partners (wpllc@cur.org)
 
 
August 22, 2014
 

Background


The federal government has had a role in higher education for more than fifty years, and that role has continued to grow as the costs associated with postsecondary study escalate. Tuition bills increasingly frustrate and/or overburden voting constituents and media scrutiny of college costs and student debt is at an all-time high—a recipe for increased engagement and focus on these issues from legislative and executive branches of government.


The Higher Education Act

The reauthorization of the Higher Education Act (HEA) is generally considered the vehicle for major changes to federal higher education policy. The legislation must be renewed regularly, and the current iteration expires at the end of FY 2014 (September 30, 2014). However, it receives an automatic one-year extension through FY 2015. After that point, Congress must pass a comprehensive reauthorization bill or "extend" the authorization of underlying programs until work can be completed on HEA.

HEA is a complex piece of legislation, containing eight Titles with multiple parts, subparts, and chapters. The latest reauthorization, 2008’s Higher Education Opportunity Act, came in at more than 1,100 pages, and took several years to complete, requiring multiple extensions. Though higher education issues are at the forefront of Congress right now, many informed observers believe an extension beyond September 30, 2015 will ultimately be necessary.

Though each Title has its own constituencies and internal debates, the three Titles which receive the most attention are Title I, Title II and Title IV. Title I includes the law’s so-called "general provisions," which can cover a wide range of activities of colleges and universities.

Title II offers a formal intersection of P-12 and higher education policy as it governs teacher preparation programs. Title IV covers most federal student assistance programs, including Pell Grants and federal student loans.


TITLE IV

Put simply, Title IV is where the action is in HEA reauthorization. This Title covers the federal government’s most significant role in higher education: the provision of grants and loans to students. In addition, nearly all reporting and regulatory requirements for colleges and universities are directly tied to Title IV, as the enforcement mechanism for these requirements is access to student aid funds.

Title IV is also where Congress can have the greatest direct impact on students. It contains the Pell Grant Program, the bedrock student aid program for providing grant aid directly to students, as well as the student loan programs, which reach the most students across all income levels. Additionally, the budgetary aspects of the programs and the consumer protection elements of student loans offer a glimmer of an opportunity for making major reforms outside of the traditional reauthorization process.

There are undoubtedly numerous issues associated with higher education not directly associated with college costs, student aid, and student loans, but these programs and the associated reporting and compliance requirements are the driving forces of the debate. At minimum, nearly all federal policy issues are tangentially related to the student aid and student loan programs as access to the Title IV programs is the federal government’s ultimate leverage point in higher education.

TITLE II

Efforts to reform P-12 education formally overlap with higher education in the laws governing teacher preparation programs in Title II of HEA. Many education reformers have recently turned to teacher preparation programs, arguing there are very few "output" based measures of these programs, which instead rely on "inputs" for their relative prestige and standing. Further, there are efforts to include "educators" broadly in the current teacher preparation provisions, so that there are federally-supported efforts to improve school and district leadership programs.

The Obama Administration has put forward a plan for reforming teacher preparation programs. Parts of the plan could be implemented without legislative action, but others require approval from Congress. The Department’s Title II websites, which include reports from each state, are found at: http://titleII.ed.gov.


Current Reauthorization Efforts

The process of reauthorizing the Higher Education Act has advanced with the first substantive action in the education committees in both the House and Senate. The Senate has completed 12 of the 12 hearings planned on the Higher Education Act reauthorization and Health, Education, Labor and Pensions (HELP) Committee Chairman Tom Harkin (D-IA) has released an HEA discussion draft for public comment. Those comments are due before the end of August. In the House, House Education and the Workforce Committee Republicans issued a white paper articulating HEA priorities and have taken the approach of passing multiple smaller bills, including several that have been passed by the House already and mark the official start to the reauthorization of the Higher Education Act.

With only about 10 legislative days left before Congress adjourns for the final stretch of the 2014 election campaign, even with a lame-duck session, it is clear that action on HEA will not be completed in the 113th Congress and must be restarted when the 114th takes office next year. The outcome of the election will determine directions taken, with the key being which party controls the Senate. Regardless of the election results, the actions taken in the House and Senate are likely to serve as the foundation for both parties’ plans for HEA in the 114th Congress.

HEA IN THE SENATE

In late June, Chairman Harkin released a discussion draft of the "Higher Education Affordability Act." Stakeholders are to provide feedback on the draft legislation by August 29. Importantly, Harkin is retiring at the end of this term and is likely to be replaced in his role as top Democrat on the Committee by Senator Patty Murray (D-WA). With mid-term elections looming, the big question is whether Murray will serve as Chair or Ranking Member of the HELP Committee.

Despite, or perhaps because of, Harkin’s pending retirement, the HELP Committee majority staff continues to work vigorously on crafting a bill. The further along the Higher Education Affordability Act makes it, the stronger marker it will be in the next Congress.

The Harkin discussion draft relies upon many of the proposals put forward by Senate Democrats in previous years. The bill reflects concerns over college costs, proprietary institutions, consumer protection issues in student loan servicing, declining state funding for higher education, and accountability for federal aid dollars, among other topics. The highlights of the discussion draft, as outlined by Harkin’s announcement, are included below:


Increasing Affordability and Reducing College Costs for Students Now By:

  • Creating a State-Federal College Affordability Partnership to increase state investment in public higher education and lower the costs of tuition for students.
  • Reinstating year-round Pell Grants to enable students to get their degrees faster.
  • Eliminating origination fees on federal Direct Loans in order to save students money.
  • Supporting community college and industry partnerships that promote innovation in higher education.
  • Creating two grant programs to promote innovation in higher education, one focused on statewide innovation and reform and the other focused on providing institutions with seed funding to test new innovations related to college affordability.
  • Expanding access to dual enrollment and early college high school programs to help students earn college credit while they are in high school.
Tackling the Student Loan Crisis by Helping Borrowers Better Manage Debt By:
  • Strengthening student loan servicing standards through the creation of common-sense consumer protections.
  • Streamlining repayment plans to create a single income-based repayment option with affordable monthly payments for struggling borrowers.
  • Helping severely delinquent borrowers avoid default by automatically enrolling them into income-based repayment.
  • Allowing private student loans to be discharged in bankruptcy.
  • Reforming abuses in the collections process and reducing unfair fees that hurt the most vulnerable borrowers.

Holding Schools Accountable to Students and Taxpayers By:

  • Providing students and policy makers with more meaningful disclosures and accountability metrics from schools, including loan repayment rates.
  • Establishing a risk-sharing commission to explore holding low-performing institutions financially responsible for poor student outcomes.
  • Protecting taxpayers by changing the 90-10 rule for for-profit schools to 85-15.
  • Guaranteeing that federal education dollars are not used on advertising and marketing.
  • Creating a student complaint system to better track harmful practices and help students get relief.
  • Authorizing several programs to reform and improve teacher and school leader preparation.
Helping Students and Families Make Informed Choices By:
  • Providing notification to middle and high school students of their potential eligibility for federal aid.
  • Providing better up-front information and disclosures to prospective students.
  • Standardizing the financial aid award letter to help students and their families better understand financial aid packages when deciding where to go to college.
  • Strengthening entrance and exit loan counseling by ensuring more comprehensive and easy to understand information is given to borrowers
     

Senator Lamar Alexander (R-TN), Harkin’s Republican counterpart, has also introduced a discussion draft of HEA-related legislation, with Senator Michael Bennet (D-CO). The bipartisan legislation, dubbed the Financial Aid Simplification and Transparency (FAST) Act, focuses exclusively on the Title IV programs and simplification. The FAST Act would replace the existing aid programs with a "one grant/one loan/one work-study" model. It also reduces the Free Application for Student Financial Aid (FAFSA) to two questions and would allow families to apply for aid two years in advance for planning purposes. Here is a description of the legislation, as described by materials from Senators Alexander and Bennet:

The Financial Aid Simplification and Transparency Act, or FAST Act, would transform the federal financial aid process by accomplishing the following:

  • Eliminating the Free Application for Financial Student Aid, or FAFSA: The bill would reduce the 10-page form to a postcard that would ask just two questions: What is your family size? And, what was your household income two years ago?
  • Telling families early in the process of what the federal government will provide them in a grant and loan. The bill would create a look-up table to allow students in their junior year of high school to see how much in federal aid they are eligible for as they are start to look at colleges.
  • Streamlining the federal grant and loan programs. The bill would combine two federal grant programs into one Pell grant program and reduce the six different federal loan programs into three: one undergraduate loan program, one graduate loan program, andone parent loan program, resulting in more access for more students.
  • Enabling students to use Pell grants in a manner that works for them. The bill would restore year-round Pell grant availability and provide flexibility so students can study at their own pace. Both provisions would enable them to complete college sooner.
  • Discouraging over-borrowing. The bill would limit the amount a student is able to borrow based on enrollment. For example, a part-time student would be able to take out a part time loan only.
  • Simplifying repayment options. The bill would streamline complicated repayment programs and create two simple plans, an income based plan and a 10-year repayment plan.

"Simplification" may be the defining buzz-word of this HEA reauthorization. There is near consensus that the aid programs are too complicated, but there is little agreement on just what to do about it. Alexander and Bennet’s bill is the most dramatic legislative effort to date, but the devil is truly in the details when it comes to simplifying the Title IV aid and loan programs.

HEA IN THE HOUSE

The House Education and the Workforce Committee decided to divide the reauthorization process up into multiple small bills, a practice they have done on other matters, with the idea to get momentum going and explore bi-partisan solutions to the extent possible. The first three bills, all non-controversial, moved easily through Committee and were passed almost unanimously by the full House July 23rd and 24th. The heavy lifting is yet to come in the House, however, as none of the bills addressed controversial issues. Brief descriptions of the HEA bills passed in the House thus far are included below:

  • H.R. 4983, Strengthening Transparency in Higher Education Act. by Higher Education and Workforce Training Subcommittee Chairwoman Virginia Foxx (R-NC) and Rep. Luke Messer (R-IN) will help students gain access to the facts they need to make an informed decision about their education.
  • H.R. 4984, Empowering Students through Enhanced Financial Counseling Act. Introduced by Reps. Brett Guthrie (R-KY) and Richard Hudson (R-NC), H.R. 4984 will promote financial literacy through enhanced counseling for all recipients of federal financial aid.
  • H.R. 3136, Advancing Competency-Based Education Demonstration Project Act, by Reps. Matt Salmon (R-AZ), Jared Polis (D-CO) and Susan Brooks (R-IN), would experiment with allowing federal student aid to go to education programs that include direct assessment of higher educational progress instead of purely time-based measurements.

Despite the plans for a piecemeal approach, the Education and the Workforce Committee also released a white paper on their comprehensive plans for reauthorization. The four principles identified by Education and the Workforce Republicans in the white paper are:
  • Empowering students and families to make informed decisions;
  • Simplifying and improving student aid;
  • Promoting innovation, access, and completion; and
  • Ensuring strong accountability and a limited federal role.
The House Education and the Workforce staff have not indicated how many bills they plan to consider as part of the HEA reauthorization effort before the end of the 113th Congress. Facing the November elections, Committee Members from both parties are likely to introduce legislation or otherwise tout their efforts on higher education and Leadership may even clear the path for passing another bill or two related to HEA on the Floor.
 

The White House & PIRS
 

The White House and the Education Department will also have a great deal of input in the reauthorization process. However, as the HELP and Education and the Workforce Committees continue work on HEA, the Administration is working on a major higher education policy proposal of their own—a plan to rate institutions of higher education and, ultimately, connect the availability of Title IV funds to those ratings.
 
The Administration’s plans, now named the "Postsecondary Institutions Ratings System" (PIRS), to first be developed, promoted, and refined over multiple years before connecting the system to any sort of performance-based funding. Importantly, the Administration can use current authority and existing data at the Department of Education to develop and publish PIRS. Congressional approval is only necessary for connecting the ratings system to Title IV funding and requiring colleges and universities to report additional data elements.
 
The White House has indicated PIRS will be functional and available to the public before the 2015 school year. The Administration is also calling on Congress to tie institutional eligibility for student aid funds to PIRS by 2018, two years after President Obama is out of office.
Top officials at the Education Department and the White House’s Domestic Policy Council have been working on PIRS for some time, but they also acknowledge comparing the 6,000+ accredited institutions of higher education is extremely challenging. Jamie Studley, a former president of Skidmore College, has been named a Deputy Under Secretary at the Department of Education and serves as the point person on PIRS in the Secretary’s office.
 
Last month, Studley announced the Department intended to delay plans to publish a proposed framework for PIRS. Studley and other top officials at the Department have met with experts, college presidents, financial aid administrators, student and consumer groups, and other stakeholders throughout the year. In spite of support from high-profile college presidents at
prestigious institutions and large state university systems, there has been widespread skepticism among experts, policymakers, and all aspects of the higher education community with PIRS.
 
The Department has acknowledged many of the challenges and criticisms leveled at PIRS, but continues to press forward. Given the connections between college presidents and their legislators, Congress is becoming increasingly aware and concerned with the Administration’s efforts on PIRS. Republicans have been the most strident in their criticism, with Representative Bob Goodlatte (R-VA), Senator Lamar Alexander and others threatening to use the appropriations process to try to halt the ratings system altogether, but concerns with PIRS are bipartisan and bicameral.
 
The negotiations over new metrics and measuring institutions of higher education against their peers will be going on against the backdrop of the early stages of HEA reauthorization. Should the Department move too aggressively with its new ratings system (or at least be perceived as doing so), increasing numbers of affected stakeholders may turn to Congress to address specific issues via HEA or otherwise get involved in this process.
 
In the meantime, the negotiations over the ratings system will run on a parallel track with HEA reauthorization. The new metrics and ratings could play a key role in setting the context for the debate over HEA reauthorization or they may become the latest failed government effort at assessing higher education and providing information to students and families.


Conclusion & Additional Information
 

Both Committees continue to work intently on HEA reauthorization, but it is clear HEA reauthorization will not occur this year, and even 2015 remains in question. College costs and student debt have become a top-of-mind issue, but there are very few legislative days left in the 113th Congress. The current efforts of the HELP and the Education and the Workforce Committees will play a significant role in this reauthorization, but the final product will be greatly influenced by changes in Committee leadership and election outcomes.
 
The top Democrats on the education committees, Chairman Harkin and Ranking Member George Miller (D-CA), are retiring at the end of the year. They are likely to be replaced by Senator Patty Murray (D-WA) and Representative Bobby Scott (D-VA). If Republicans take the Senate, Senator Mike Enzi (R-WY) could return to his role as Chairman even though Alexander currently serves as Ranking Member. Many observers believe Alexander would assume the role of Chairman in the event of a Republican takeover.
 
These changes in Committee leadership will have a tremendous impact on the reauthorization process moving forward, but they will not simply abandon the efforts of the 113th Congress. HEA is a very complex piece of legislation and reauthorization is very much a building exercise. As proposals move further along the legislative process, they become a stronger foundation for the final product. This is not lost on the retiring Committee leaders, particularly Chairman Harkin, who is likely to make a push for a HELP mark-up of his reauthorization bid before the end of this Congress, most likely during the lame duck session.
 
As campaign season hits full swing, issues related to student loans and college costs are likely to continue to grab the most attention and scrutiny on the trail. A growing body of legislators from both parties appear to be reaching the conclusion the student loan programs are broken. However, Republicans and Democrats believe they are broken for completely different reasons.
 
With student debt also now a major campaign issue that also happens to have serious budget implications, it also increases the likelihood of Congressional action on something related to college costs outside of the traditional HEA process. The more their constituents are burdened and college costs and remains a top line story in the news, the more legislators will want to do something to address the problem. Additionally, as the federal government holds more than $600 billion in student loans and originates more than $100 billion on annual basis, changes to the loan programs often receive at least some consideration in negotiations and proposals related to the federal debt and deficit.

Additional Information
  • Additional information on the Senate HELP HEA reauthorization discussion draft is available online: http://goo.gl/ImeXYr
  • Additional information on House Republican HEA efforts is available online: http://goo.gl/YPHMCr
  • Additional information on the FAST Act discussion draft from Sens. Alexander and Bennet is available online: http://goo.gl/CY6tOb
  • Additional information on PIRS is available online: http://goo.gl/T2nKHI
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