COHEAO Steering Committee Meeting
San Antonio, Texas
October 10-11 2002
2003 Labor-HHS-ED Appropriations
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:
- Total appropriation of $13,162,000,000. An increase of $876,500,000
over FY02 and $394,500,000 more than the administration's request.
- Pell Grants: $11,180,000,000. $317,000,000 more than requested.
Amount is sufficient to raise max grant by $100 to $4,100.
- Federal Perkins Loans: $100,000,000 for capital contributions,
the same as FY02. This would cover 700,000 loans. Also $72,500,000
for loan cancellations, a $5,000,000 increase over FY02.
- Federal Supplemental Educational Opportunity Grant: $725,000,000,
the same amount as FY02.
- Work-Study: $1,011,000,000, the same amount as FY02. 7% must be
used for community service jobs.
- Leveraging Educational Assistance Partnership: $72,500,000, an
increase of $5,500,000 over FY02. The administration proposed eliminating
this.
- Loan Forgiveness for Child Care Providers: $1,000,000, the same
as FY02.
FY02 Supplemental Appropriations Signed August 2, 2002
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.
Higher Education Act Reauthorization
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.
Bankruptcy Reform
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.
Tracking International Students
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.
Consolidation Loans
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.
House Hearing On College Costs; Topics Include Expense Increases,
Funding Cuts
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.
House Hearing on Institutional Accreditation
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.
Rep. Tom Petri (R-WI) Calls for Removal of Accreditation as Requirement
for Participation in Title IV Student Aid Programs
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.
FED UP Legislation Stalled
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.
CCA Pulls Out of ACE
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.
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