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Pell Provision Dropped, Senate Passes Student-Aid Bill

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WASHINGTON--After dropping the most contentious component of a bill reauthorizing the Higher Education Act and deferring consideration of another controversial proposal, the Senate late last month handily passed the measure by a 93-to-1 vote.

Few other significant changes were made to S 1150, which would authorize $57 billion for student-aid and other higher-education programs over five years.

Senate Democrats agreed to drop a provision making the Pell Grant an entitlement in fiscal year 1997 after it appeared that the provision would threaten the entire bill.

They also agreed to put off voting on an amendment that would establish an income-contingent, direct-loan program because a compromise could not be reached on the details of such a program before the vote. (See Education Week, Feb. 26, 1992.)

Those moves paved the way for easy passage of the bill. Only Senator Jesse Helms, Republican of North Carolina, voted against it.

Senator Edward M. Kennedy, the Massachusetts Democrat who chairs the Labor and Human Resources Committee and a primary sponsor of S 1150, announced at a hearing last week that he and Senators Paul Simon, Democrat of Illinois; Bill Bradley, Democrat of New Jersey; and Dave Durenberger, Republican of Minnesota, had introduced a separate bill that would establish a direct-loan program.

The pilot program would involve a cross section of 300 higher-education institutions at first, and would provide loans of up to $5,000 per year for undergraduates regardless of financial need.

The Internal Revenue Service would deduct a percentage of a borrower's income for repayment, and no borrower would pay more than 7 percent of his or her income.

Students would receive loans directly from the federal government.

The bill would require the Education Department to evaluate the administration of the program at the 300 schools before the Congress considered its expansion.

Differing Opinions

"The people of this country need another good way to help pay for a college education,'' Mr. Bradley said at last week's hearing.

But Senator Claiborne Pell, the Rhode Island Democrat who chairs the Senate Education, Arts, and Humanities Subcommittee and is S 1150's chief sponsor, expressed skepticism, saying that the Congress should work to make the Pell Grant an entitlement before introducing new programs.

Likewise, the idea of establishing a direct-loan program has divided the education community. Numerous institutions have lined up on one side of the debate or the other, and lobbying organizations here have not stuck their necks out on any direct-loan proposal.

Lenders and guarantors, who would be eliminated by full implementation of a direct-loan program, meanwhile, are naturally opposed.

In an attempt to address that constituency, the direct-loan bill, S 2255, calls for the plan to supplement, and not to replace, the Guaranteed Student Loan program.

The bill has been referred to the Senate Finance Committee, where Chairman Lloyd Bentsen, Democrat of Texas, may add it to his pending tax bill, or where Mr. Bradley may offer it as an amendment.

A similar measure was included in the House H.E.A. bill, HR 3553, which has not yet gone to the floor. Representative William D. Ford, the Michigan Democrat who chairs the House Education and Labor Committee, is negotiating possible changes in the House plan.

Although they had lobbied heavily to garner support for the Pell-entitlement provision, members of the higher-education community here said S 1150 will improve the opportunities of poor and middle-income students to go to college.

"The rest of the bill, notwithstanding what happened with the entitlement, is a good bill,'' said Ed Elmendorf, the vice president for government relations with the American Association of State Colleges and Universities.

Added Charles Saunders, a senior vice president and the director of governmental relations with the American Council on Education: "Over all, it's a very big plus.''

The Bush Administration opposes both a Pell entitlement and direct loans, and Etta Fielek, a spokesman for Secretary of Education Lamar Alexander, said the bill "is much better than what they started out with.''

Bill Highlights

Among other provisions, S 1150 would:

  • Increase the maximum Pell Grant to $3,600, with $200 annual increases; expand eligibility to students from families earning up to $42,000; remove home and farm equity from the needs calculation for middle-income students; and award an additional $1,000 per year to grant recipients who have taken certain academic courses and participated in an early-intervention program.
  • Increase the amount of money students can borrow. First- and second-year students could borrow up to $3,000, and up to $5,000 would be available to other undergraduates.
  • Establish a new teacher corps, whose student members would receive college aid in exchange for teaching in underserved areas; expand programs to recruit nontraditional teachers and to promote alternative certification; and establish national and state teacher academies.
  • Authorize the Education Department to publicize the availability of aid and the importance of higher education, and create a new grant program to encourage states to develop early-intervention programs.
  • Make schools with default rates higher than 25 percent ineligible for the guaranteed-loan program, echoing provisions written into a 1990 budget bill.
  • Establish a single needs-analysis formula to calculate eligibility, use a single application form, and make the most needy students automatically eligible.

Before approving the bill, the Senate added numerous amendments. Among the most noteworthy are provisions that would:

  • Prevent school districts from using drug-free-schools money for gay and lesbian support-service programs, a practice that Mr. Helms contended was occurring in several school districts.
  • Establish a National Commission on Containing College Costs.
  • Call on states to serve as watchdogs for institutions that may abuse federal financial-aid programs. The proposal would replace provisions currently requiring state licensure.


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