Senate Labor-HHS-Education Subcommittee Approves FY2013 Spending Measure

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June 14, 2012 · by Wes · Spark Notes

Prepared by: Wes Huffman (whuffman@wpllc.net)

The Senate Labor-HHS-Education Appropriations Subcommittee approved the FY2013 spending bill governing the Department of Education yesterday on a party line vote of 10-7. The full Senate Appropriations Committee is expected to approve the measure tomorrow, again on a party line. Action by the entire Senate and final Congressional action is not expected for months, however, likely after the November election.

Unfortunately, and despite some strong efforts from COHEAO members, the bill approved by the Subcommittee does not include funding for cancellations or the federal capital contribution (FCC) in the Perkins Loan Program. However, importantly, there are still many steps left in the process before the spending bills for FY2013 become final law.

There will be critical differences between House and Senate spending bills which must worked out before they can become law. Although the current fiscal year ends on June 30, 2012, many short-term spending measures, or continuing resolutions (CR), are likely to keep the government funded until the two sides can work out their differences. CRs are expected until at least after the November elections, if not until the beginning of the next Congress.

Even in the face of setbacks during the appropriations process, it is extremely important for COHEAO to develop and maintain relationships with their elected officials and their staff. As explained above, the process may still last as long 6-7 more months and there may still be opportunities to secure Perkins cancellation funding. Also, maintaining those relationships will be incredibly critical as we move toward HEA reauthorization during what will either be the second term of President Obama or the first term of a President Romney.

In terms of the contents of the actual bill, the legislation approved by the Senate Labor-HHS-Education Subcommittee adheres much more closely to the President’s budget request than the draft House Labor-HHS-Education spending bill. It also includes multiple changes to authorizing language for education programs, but does not include the President’s request to recast Perkins Loans as “Direct Perkins.” Should Congress refrain from changes to the Perkins Loan program, as expected, it will mean that Congress has rejected attempts to convert Perkins Loans to “Direct Perkins” every year the President has been in office.

As far as specific programs and figures, the bill approved by the Labor-HHS-Education Subcommittee (and expected to be approved by the full Committee) would increase discretionary funding at the Department of Education by $406 million. In terms of Pell Grants, the Subcommittee bill maintains the discretionary portion of the maximum Pell Grant award level at $4,860 for the 2013–2014 school year. Combined with mandatory funding, the total maximum award will rise by $85 to $5,635.

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The bill also includes the “First in the World” fund, a grant program to provide colleges and universities with funds aimed at reducing the net price paid by students and improving outcomes. It also includes pilot programs, dubbed “Pay for Success,” which would provide funding for organizations based on a set of agreed upon goals and outcomes.

In order to pay for increasing the Pell award and other programs, the bill also makes changes to authorizing language. It would limit student eligibility for Subsidized Stafford Loans to 150% of the normal length of an academic program (i.e. six years for a standard bachelor’s degree). It also would no longer allow for room and board costs to calculate Pell eligibility for strictly online courses.

The bill also includes the proposal to reduce the payments made to guarantors for successfully rehabilitated loans. The modification of guarantor payments on rehab loans is two-fold: (1) eliminating their current retention share of the original defaulted student loan amount, and (2) reducing to 16 percent the fee they can charge a borrower on a borrower’s outstanding balance.

Finally, in terms of authorization, the bill approved by the Subcommittee would prohibit the use of federal education resources on marketing, advertising, or recruiting. Sen. Tom Harkin (D-IA), the Subcommittee Chairman and Chairman of the Senate HELP Committee, has been pushing for a requirement for some time. These requirements are currently not expected to make into the final FY2013 Labor-HHS-Education appropriations bill when it is passed, whenever that may be.

Attachments

A summary of the legislation from the Democratic staff of the Labor-HHS-Education Subcommittee is included with this Spark.

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A chart of funding levels for Department of Education programs under the bill prepared by the Committee for Education Funding is also included with this Spark.

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