Federal

Hope Springs Eternal for New Higher Education Act

By Vaishali Honawar — April 12, 2005 6 min read

Despite some early partisan skirmishes over student-loan programs, members of Congress say they are optimistic that the Higher Education Act will finally be reauthorized in the two-year span of the 109th Congress.

The HEA, the main federal law that governs the flow of billions of dollars of federal aid to colleges and universities, was last reauthorized in 1998. Despite much work in the 108th Congress, lawmakers could not come to agreement on the details of reauthorizing the law. It has twice been extended for one-year periods.

“We are at a point where we need reauthorization and need a signal from Congress on what the prevailing philosophy will be going forward,” said Sharon Robinson, the president of the American Association of Colleges for Teacher Education, based in Washington. She added that since the breakdown of talks over the reauthorization at end of the last congressional session, “we have come a long way. It is looking like the conversations are more focused and substantive than they were before.”

Besides authorizing federal programs for student loans, grants, work-study, and institutional aid, the HEA also covers programs to improve teacher preparation.

Members of Congress from both parties say that reauthorization is a top priority for this year. Rep. John A. Boehner, R-Ohio, the chairman of the House Education and the Workforce Committee, said the experience gleaned from the last two years of hearings, meetings with higher education stakeholders, and the drafting of various bills would help propel reauthorization efforts.

“With college tuition continuing to soar, and millions of low- and middle-income students struggling to gain access to college, getting the Higher Education Act reauthorized is important,” Rep. Boehner said in an e-mail.

Battles Over Loans

His feelings were shared by Rep. George Miller, D-Calif., the education committee’s ranking minority member, who said in an interview that despite “serious differences” on the committee over reauthorization provisions, “the intent is to work those out and get the legislation passed.”

Sen. Edward M. Kennedy, D-Mass., the ranking member of the Senate education committee, said in a statement to Education Week that “the new context of the global economy demands that we reconsider, maybe even redesign, federal higher education policy, sooner rather than later.”

One of the most controversial items in the Republican proposal would prevent student borrowers from refinancing their loans at a government-subsidized fixed interest rate for up to 30 years.

Instead, the rate would vary from year to year based on market conditions, but would be capped at an 8.25 percent annual percentage rate.

Revising the HEA

Congress did not complete the reauthorization of the Higher Education Act during its last term. But lawmakers are hoping to reach a consensus during the 109th Congress, which began in January.

Under Republican measures, the revised HEA would:

• Increase the maximum Pell Grant award from $4,050 to $5,800 for the 2006-07 through 2012-13 academic years.

• Prevent borrowers who wished to refinance student loans from locking in a low, fixed interest rate.

• Place colleges that consistently raise tuition at a certain rate above inflation on a government watch list.

Under proposals favored by Democrats, the revised law would:

• Increase the maximum Pell Grant from $4,050 to $4,500 in 2005-06 and $7,600 the following year, increasing thereafter by $1,000 each year through 2010-11.

• Offer incentives to colleges and universities for choosing to participate in the Federal Direct-Loan Program.

• Provide for increased amounts of loan forgiveness and cancellation under HEA programs for certain teachers.

Source: Congressional offices

Mr. Boehner said such “common-sense changes” would help expand college access for low- and middle-income students. He said the Congressional Research Service found last year that in 13 of the past 18 years, borrowers would have been better off and paid less interest with variable-rate consolidation loans.

But Democrats say the Republican bill, while friendly to student-loan providers, would make college costlier for students who are already overwhelmed by the ever-rising cost of tuition.

“We have got to look at whether the Higher Education Act will benefit students and families with the cost of higher education,” Mr. Miller said. “We can’t look at what we are doing for the banks and lending institutions.”

Mr. Boehner, however, pointed to a “growing bipartisan consensus” on the loan-rate issue, adding that more than half the Democrats on his committee backed legislation favoring variable interest rates during the last session of Congress.

In March, Democrats and Republicans in both houses introduced bipartisan bills that would expand the direct-loan program under which loans are dispensed by the federal government without any middlemen. According to the Congressional Budget Office, the proposal would generate more than $17 billion in savings over the next decade. Colleges participating in the direct-loan program would receive half the resulting savings, and the other half would be used by the federal government to increase student aid, including Pell Grants.

“In this budget cycle we are in, $17 billion is a very serious amount of money,” said Mr. Miller, a co-sponsor of the House bill.

But a study released in March by the PricewaterhouseCoopers accounting firm said the budget office undercalculated the costs of the direct-loan program and overestimated the costs of the guaranteed-loan program. While the bill’s supporters derided the study as biased, opponents including Rep. Boehner point out that the Government Accountability Office and the Department of Education’s inspector general’s office have also raised alarms about the true costs of the direct-loan program.

Teacher Development

Some HEA reauthorization bills pending in Congress contain new provisions on teacher development, including a call from both Republicans and Democrats for the creation of centers of excellence that would recruit and prepare teachers, particularly minority teachers.

Universities that target minority student populations could apply for federal grants of $500,000 or more per year for such centers. While Rep. Boehner’s bill would authorize $10 million for the centers for fiscal 2006, the Democratic version from last year sought twice that much.

Ms. Robinson of AACTE said there are concerns that Congress may need to divert funds from existing programs to pay for the initiative.

“We want federal funds to help us advance our work and not continue to go round and round,” she said.

The Republican bill also would authorize grants to states for enhancing teacher quality and grants for preparing teachers to use technology. It would encourage states to assist local school districts in developing merit-based performance systems that rewards teachers who increase student achievement and school districts that successfully retain teachers and principals.

The Senate Democrats’ reauthorization bill would increase student-loan-forgiveness amounts for teachers in certain subjects, such as special education and early education, and add teacher-quality-enhancement grants, as well as grants for technology preparation for teachers.

An Opportunity

Education observers say that in a time of sharply rising tuition costs, Congress should not miss this opportunity to reauthorize the Higher Education Act.

“It would be good to just get it out of the way because we’ve been working on reauthorization for almost three years,” said Chris Simmons, an assistant director of government relations at the American Council on Education based in Washington.

Clara M. Lovett, the president of the American Association for Higher Education, also based in Washington, said she is hopeful because the new rounds of talks on the act have started off “on a more conciliatory note.”

“The issues have not changed but the tone has changed—there is more of a desire to reconcile differences of opinion,” she said.

However, some point out that the intense politicking over student-loan programs is taking attention away from issues like the imbalance between student loans and grants in the bills.

“The whole notion that today over three-quarters of federal aid goes to students in loans and only a quarter in grants is absurd to us,” said Larry Gold, the director for higher education at the American Federation of Teachers. “It wasn’t long ago that the situation was reversed.”

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