Next Step for the Higher Ed Act

With legislative picture muddied by Katrina, Senate panel makes fast work of its version of key bill.
September 9, 2005

Bipartisanship may be efficient, but it sure can be boring to watch.

On Thursday, members of the U.S. Senate Committee on Health, Education, Labor and Pensions spent all of a half-hour approving a bill to extend the Higher Education Act. That compares to the three days of occasionally high drama that the House Committee on Education and the Workforce spent debating and amending its version of the main federal higher education law in July , which followed a contentious two-day drafting session in the House’s higher education subcommittee.

The Senate bill, S 1614, was jointly introduced late Tuesday by the committee's chairman, Sen. Michael B. Enzi (R-Wyo.), and its top Democrat, Sen. Edward M. Kennedy, and senators and staff members on both sides of the aisle played a significant role in crafting it. That doesn't mean they are entirely happy with it -- Kennedy especially made clear that his party dislikes some aspects of the bill, and may try to amend it on the Senate floor -- but it is clearly a compromise that both parties can live with.

Thursday's business session, then, was kept very businesslike, with Enzi openly discouraging senators from offering their usual statements praising this, that, or the other thing about the bill, and each other. Enzi even bristled when the Senate majority leader, Sen. Bill Frist of Tennessee, asked if he could make a brief (which turned out to be not-so-brief) comment. After a handful of other statements and withdrawn amendments, the panel approved the bill by a 20-0 vote.

The fact that the Higher Education Act legislation was drafted in a bipartisan manner wasn't the only reason for the committee's quick work. As Enzi noted, the renewal of the Higher Education Act has been "hanging out there for awhile," since Congress started work on it more than two years ago, and politicians and college officials alike would like to see it get passed.

More importantly, perhaps, is that Hurricane Katrina has complicated what promised already to be a busy, complicated and potentially thorny fall for Congress generally, and higher education issues are not immune. Enzi and Kennedy played host Thursday morning to a round table in which college officials were among those offering ideas for ways the federal government, and the committee, might help schools, workers, and health organizations on the Gulf Coast recover from Katrina. Enzi said the panel would begin working on Monday on a "logical package" of things Congress might do legislatively, on top of the $51 billion in emergency aid that both houses approved on Thursday. 

The post-Katrina situation is likely to affect just about everything that Congress does this fall, and the Higher Education Act is no exception. That's because as they drafted their respective Higher Education Act bills this summer, the Senate and House committees have faced significant pressure from Republican leaders to find any possible savings from federal entitlement programs (like student loans) that can be applied toward paying down the budget deficit -- a deficit produced, in part, by a set of proposed tax cuts. In the wake of Katrina, some public officials have argued that the country cannot afford the tax cuts because of the huge potential costs of rebuilding New Orleans and other severely damaged areas in Louisiana, Mississippi and Alabama. 

The linking of the Higher Education Act renewal and the budget reconciliation process has significantly shaped the college law -- the House's legislation would redirect as much as $12 billion out of the government's two competing student loan programs toward deficit reduction, while the Senate bill would produce $7 billion in budget savings but use other proceeds from the loan programs to provide $5.5 billion in new grants for low-income students over five years.

It's not entirely clear what effect decoupling the Higher Education Act legislation from the budget reconciliation process would have, and college lobbyists don't seem sure themselves. They have moved quickly, though, to ensure that colleges in the Gulf Coast region are taken care of in any federal relief efforts, and that Congress takes steps to help colleges and students in the area. For instance, the House on Thursday approved a bill (HR 3668) that would give the U.S. Education Department more flexibility to waive requirements for student aid recipients who are forced to withdraw from their colleges in the aftermath of Katrina. 

And private college officials are hoping that Congress will push the Federal Emergency Management Agency to reverse a 2000 regulatory change that made nonprofit institutions, including colleges, ineligible for certain disaster funds from the agency. Without access to those funds, private nonprofit colleges like Xavier University could be forced to turn to loans from the Small Business Administration to cover any costs of rebuilding or renovating permanent buildings that aren't covered by insurance.Public colleges are not in the same position because they typically have access to state funds.

"Given the intensity of the disaster, it seems to us that the FEMA regulations for nonprofits have to be altered," said Cynthia J. Littlefield, director of government relations at the Association of Jesuit Colleges and Universities.

Back to the Higher Education Act

Among other things, the legislation that the Senate education panel approved unanimously on Thursday would:

  • Make a set of changes in the Pell Grant Program, including letting recipients use their grants year-round; raising the income cutoff for the program to $20,000, from $15,000; repealing a provision in the law that limits the amount of Pell Grant funds students at community colleges and other low-tuition institutions can receive; and increasing the ceiling to which appropriators can raise the maximum Pell award to $5,100 in 2006-7 and incrementally to $6,300 over five years.
  • Leave intact the current formula for distributing funds for three “campus based” aid programs: the Perkins Loan, Federal Work Study, and Supplemental Educational Opportunity Grant Programs. Private colleges favor the current arrangement, which distributes much of the programs’ funds to institutions based on how long they’ve been in the programs. Community colleges and other newer institutions oppose the present formula and have pushed to revamp it, which the House bill would do.
  • Use funds saved by cutting subsidies for lenders to establish a new “temporary” mandatory program that would provide $5.5 billion in grant funds over five years. About $4.5 billion of the money in the Provisional Grant Assistance Program (or ProGAP) would go to supplement other grant aid for students for low-income families; the other $1 billion would provide grants to third- and fourth-year college students in science, mathematics and foreign-language fields.
  • Leave at 6.8 percent the fixed rate that borrowers pay to consolidate multiple student loans into one, and set at a 6.8 percent fixed rate what borrowers pay for Stafford loans. But the Senate bill would increase to 8.5 percent from 7.9 percent the fixed rate on loans taken out by parents.
  • Continue to allow some nonprofit lenders to benefit from a subsidized interest rate of 9.5 percent on loans made by “recycling” existing pools of funds drawn from certain bonds, which Kennedy has strongly opposed. "We've agreed to differ" on that, Kennedy said to Enzi Thursday.
  • Maintain separate definitions for nonprofit and for-profit institutions so that for-profit institutions have access to student aid funds but not most other pools of grant money in the Education Department. But the Senate bill also softens two rules that for-profit institutions say prevent them from reaching more students, but that critics say have prevented fraud and abuse in the student aid programs for a decade.
  • Create a fellowship program to encourage more women and members of minority groups to go into the professoriate.
  • Institute a series of changes aimed at simplifying the process by which students apply for and receive financial aid.

It is not clear when the full Senate and House will take up their committees' respective versions of the Higher Education Act legislation. But once they do, lawmakers from the two parties would then meet to craft a compromise between the two measures -- all of which would have to happen, amid Katrina, Supreme Court nominations, and the federal appropriations process, before Congress finishes its work for the year.


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