HEA Reauthorization: Looking for Direction

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HEA Reauthorization Looking for Direction
2005 MASFAP Fall Conference The Lodge of the Four
Seasons Presenter Laurie Wolf Des Moines
Area Community College
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Higher Education Act of 1965

• An Act to strengthen the educational resources
  of our colleges and universities and to provide
  financial assistance for students in
  postsecondary and higher education.
• Lyndon B. Johnson
• January 4, 1965

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Time Line
2006
2000
2005
2004
2003
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Environment

• War
• Economy
• Budget Cuts
• No Child Left Behind Themes
• ? Accessibility
• ? Affordability
• ? Accountability
• ? Quality

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Environment (cont.)

• Supreme Court Appointments
• Hurricane Katrina
• Hurricane Rita
• Legislator Scandals

Partisanship
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Activity to Date

• NASFAA recommendations
• Hearings
• Testimony to Committees
• White Papers
• Introduction of Bills
• HELP Committees Bills Approved
• House Markup (H.R. 609) July 22
• Senate Markup (S. 1614) September 8
• Three month extension

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Normal Next Steps

• Floor Consideration House
• Floor Consideration Senate
• Conference Committees
• Review and Debate of Conference Report
• Send to the President for Approval
• Regulatory Process/Negotiated Rulemaking

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Whats in the Bills?
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Pell Grant

• HOUSE
• Increase max awards to 6,000 for 2006-07
• Year-round Grants
• 18 semester eligibility
• Repeals Pell Grant tuition sensitivity
  requirement

• SENATE
• Decreases max award to 5,100 for 2006-07
  provides for a 300 per year increase for the
  next four years.
• Year-round Grants
• 18 semester limit

Current law The authorized maximum award for
2003-04 was 5,800.
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New Grant Program Proposals

• HOUSE
• Creates enhances Pell Grants Plus
• Achievement Grants for State Scholars program
  that would provide a 1,000 bonus for Pell Grant
  eligible students who participate in the State
  Scholars program of study in high school.

• SENATE
• Establishes Provisional Grant Assistance Program
  (ProGAP)
• Provides additional grants to Pell eligible
  students.

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New Grant Program Proposals (cont.)

• HOUSE
• Math Science Honors Scholarships
• Competitive awards to students pursuing BA,
  MA, PhD in science and engineering.
• Loan forgiveness

• SENATE
• National SMART Grants
• Provide up to 1,500 per year to Pell
  eligible students in their third or fourth year
  of study, who are majoring in math, science,
  engineering, or a foreign language critical to
  national security.

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Campus Based Aid Programs

• HOUSE
• Formula
• Phases out base guarantees and creates fair
  share allocation process over 10 years
• SEOG
• Authorizes 799M for FY2006, and such funds
  as may be necessary for succeeding five years

• SENATE
• Formula
• Maintains current allocation formula
• SEOG
• Authorizes such funds as may be necessary for
  FY06 and succeeding five fiscal years

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Campus Based Aid Programs (cont.)

• HOUSE
• Work-Study
• Authorizes 1B for FY2006, and such funds as
  may be necessary for succeeding five years
• Perkins Loan
• Authorizes 250M for FY2006, and such funds
  as may be necessary for succeeding five years

• SENATE
• Work-Study
• Provides waiver for 7 community service
  requirement
• Authorizes such funds as may be necessary
  for FY06 and succeeding five fiscal years
• Perkins Loan
• Authorizes such funds as may be necessary
  for FY06 and succeeding five fiscal years

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Perkins Loan Program

• HOUSE
• Increase annual limits
• Undergraduates 5,000
• Graduates 8,000
• Increases aggregate limit
• Undergraduate 27,500
• Graduate 60,000

• SENATE
• Maintains current law

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Stafford Loan Program

• HOUSE
• Borrowing Limits
• Increases undergraduate annual limits
• 1st year 3,500
• 2nd year 4,500
• Increases unsubsidized annual limits for
  graduates 12,000

• SENATE
• Borrowing Limits
• Increases undergraduate annual limits
• 1st year 3,500
• 2nd year 4,500
• Increases unsubsidized annual limits for
  graduates 12,000

No expansion to aggregate borrowing limits.
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Origination Fees

• HOUSE
• Phases down borrower paid fees in Direct to 1,
  but raises fee to 3 in 2006 prior to phase down
• Phases out 3 fee in FFEL by 2010
• Requires collection of 1 FFEL guarantee fee

• SENATE
• Permits Secretary to set Direct fee from 1-3
• Maintains current FFEL 3 fee
• Lenders retain ability to pay fee for borrowers
• Requires collection of 1 FFEL guarantee fee

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Interest Rates

• HOUSE
• Eliminates provision in current law that changes
  variable to fixed 6.8 after July 1, 2006
• Retains current variable rate capped at 8.25

• SENATE
• Retains provision in current law that will
  convert the interest rate on Stafford and
  Consolidation loans to a fixed 6.8 after July 1,
  2006

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Consolidated Loans

• HOUSE
• Allows borrowers to choose either fixed or
  variable rates
• Rate capped at 8.25
• Permits reconsolidation or refinancing for
  borrowers seeking income-contingent repayment or
  who are consolidating a defaulted loan

• SENATE
• Retains current fixed interest rate, but
  increases the origination fee paid to 1
• No provision for reconsolidation or refinancing

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Loan Disbursements

• HOUSE
• Reinstates expired provisions with low student
  loan default rates to allow them to waive the
  30-day disbursement delay and to disburse loan
  proceeds in one disbursement to new students.

• SENATE
• Reinstates expired provisions with low student
  loan default rates to allow them to waive the
  30-day disbursement delay and to disburse loan
  proceeds in one disbursement to new students.

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Single Holder Rule

• HOUSE
• Repeals single holder rule but requires borrower
  to consult with current loan holder when
  consolidating

• SENATE
• Repeals single holder rule

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Loan Repayment and Forgiveness

• HOUSE
• Creates a new 2-year forbearance
• Repeals 3-times rule
• Loan forgiveness for teachers
• Creates loan forgiveness for nurses, early
  child- hood educators, math science teachers

• SENATE
• Creates new loan forgiveness condition in Direct
  Loan program for public sector employees

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School As Lender

• HOUSE
• Clarifies only applies to Stafford loans for
  graduate and professional students
• Requires use of all institutional revenue to be
  used for need-based aid

• SENATE
• Imposes a moratorium on new schools allows
  current schools to continue
• Requires use of all institutional revenue to be
  used for need-based grant aid

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Experimental Sites

• HOUSE
• Maintains experimental sites for the
  administration of federal student loans at
  institutions with successful programs

• SENATE
• Permits, but does not require, the Secretary the
  authority to continue successful experimental
  sites at participating institutions

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Needs Analysis

• HOUSE
• Expands auto zero to families or students who
  receive benefits under certain mean-tested
  federal benefit programs
• Creates new EZ FAFSA
• Increases income protection allowance to 3,000
  for employed dependent students

• SENATE
• Expands auto zero to families or students with
  adjusted gross income less than 20,000
• Creates new EZ FAFSA
• Increases income protection allowance to 3,000
  for employed dependent students

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Accreditation

• HOUSE
• Permits states to accredit institutions
• Establishes new accreditation review standard
• Requires public disclosures of agency actions
• Expands the due process provisions in current law

• SENATE
• No provision on states accrediting institutions
• No provision on board of governance
• Requires public disclosures of agency actions
• Expands the due process provisions in current law

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Transfer of Credit

• HOUSE
• Requires institutions to have a transfer of
  credit policy and to make it publicly available
• Must include a statement that the transfer of
  credit is not solely denied on the basis of the
  accrediting agency of the sending institution

• SENATE
• Requires institutions to make public their
  transfer of credit policies
• Which must include (1) a statement that the
  transfer of credit is not solely denied based on
  the accrediting agency of the sending
  institution, and (2) a list of institutions with
  which the institution has a transfer articulation
  agreement

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50 Rules on Distance Education

• HOUSE
• Repeals the 50 rule

• SENATE
• Maintains the 50 rule

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Definition of Institution

• HOUSE
• Creates a single definition.

• SENATE
• Maintains current law
• Two definitions of institutions for nonprofit and
  proprietary

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Student Information Reporting Requirements

• HOUSE
• No similar provisions

• SENATE
• Requires institutions to report on student body
  diversity, including information on the
  percentage of enrolled, full-time students who
  are (1) male, (2) female, (3) form a low-income
  background, and a self-identified member of a
  major racial or ethnic group

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Alumni Reporting Requirements

• HOUSE
• No similar

• SENATE
• Requires institutions to report to the Department
  information on employment placement of graduates
  and graduates that enroll in graduate education

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College Costs

• HOUSE
• Requires collection of additional information by
  the Department
• Creates a College Affordability Index
• Provisions for institutions who fail to comply

• SENATE
• Requires the Department to collect and provide
  public information about costs of attendance

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Drug Offenses

• HOUSE
• Clarifies current law
• Applies only to enrolled students who are
  receiving Title IV Aid and are convicted

• SENATE
• Clarifies current law
• Applies only to enrolled students who are
  receiving Title IV Aid and are convicted

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Non-Student Aid Provisions

• HOUSE
• The sense of the Congress universities should
  facilitate the free and open exchange of ideas
  and that students should not be discriminated
  against and should be treated equally and
  fairly

• SENATE
• No similar provision

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Whats Not

• STAR Proposal
• Switching use of tax tables to an Income
  Protection Allowance (IPS) calculation to assess
  family contribution
• Limited Return of Title IV changes
• Legislation is in state of flux changes taking
  place behind the scenes.

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What Should the Aid Community Be Doing?

• Track Bills
• Be aware of SAVINGS RAIDINGS!!!!!
• Research effects of proposed changes to your
  campus and students
• Get acquainted with members of your Congressional
  Delegation
• Watch for call for action from NASFAA, MASFAA and
  State Federal Issues contacts

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Restore the Intent of HEA

• An Act to strengthen the educational resources
  of our colleges and universities and to provide
  financial assistance for students in
  postsecondary and higher education.
• Lyndon B. Johnson
• January 4, 1965