The Screw Turns in the Senate

Education committee's bill to cut deficit and extend Higher Ed Act would provide extra $2.5 billion to new grant programs.
October 19, 2005

Congress took the next step Tuesday toward extending the Higher Education Act, a process made much more convoluted than usual this year by a coalescence of unusual events. Explaining what happened and what it means is a challenge, so first, a quick primer on a little corner of federal policy making that most readers are never likely to visit (if they're lucky):

First, the easy part: Each year Congress enacts a budget for the operations of the federal government. Every so often -- particularly when Congress faces large deficits or otherwise wants to make major changes in law to bring spending under control -- it also engages in the optional process known as "budget reconciliation.

In that process, (and this is the oversimplified version) the House and Senate committees that oversee different parts of the government (for instance, education and labor in the House, or education, health and labor in the Senate) are asked to identify cuts in the mandatory spending programs they oversee to reduce the deficit. The Senate and House Budget Committees then stitch the individual committees' reconciliation bills together to create one overarching piece of legislation that achieves the total amount of cuts.

Congress is pursuing budget reconciliation this year, and in April, it approved a budget resolution that directed the eight committees in both chambers to cut a total of $35 billion from mandatory programs by this month. Congress is also trying this year to renew and extend the Higher Education Act for five years, and that process has become entangled with the reconciliation process (and that mess has been further complicated by the federal government's efforts to rebuild the Gulf Coast region after Hurricanes Katrina and Rita -- more on that later). 

The Senate and House committees responsible for education -- the House Education and the Workforce Committee and the Senate Committee on Health, Education, Labor and Pensions -- were asked to bear a disproportionate share (more than a third) of their chambers' cuts, and both panels have, in drafting bills to extend the Higher Education Act, identified savings through cuts in lender subsidies and some increased interest rates for students to try to meet the budget cutting targets set for them by Congressional leaders.

In July, the House panel passed a reauthorization bill estimated to cut nearly $9 billion from the loan programs and direct it to deficit reduction; last month, the Senate panel approved a bill that would squeeze more than $12 billion from the loan programs, but redirect nearly $5.5 billion of those savings to create new “temporary” grant programs for students (about $4.5 billion for those from low-income families, and $1 billion for third- and fourth-year college students in science, mathematics and foreign-language fields).

Got it so far? Then here's what happened Tuesday:

The Senate education committee drafted its piece of the budget reconciliation bill (S. 1873) that would both provide the $13.65 billion in savings mandated by the Senate Budget Committee (through about $7 billion in cuts to the student loan programs and $6.65 billion in cuts to worker pension benefits, which are also under the committee's jurisdiction) and extend the entire Higher Education Act. (The fact that the higher ed bill got attached to the reconciliation bill may mean that the crucial college legislation, which governs student aid and many other programs, is more likely to pass this year, but that depends largely on whether something similar happens in the House -- an uncertain proposition.)

The most interesting development for higher education Tuesday was that the panel's leaders said that the Congressional Budget Office, in reviewing the Higher Education Act legislation passed in September to say how much it would cost or save, had identified several billion dollars in additional savings generated by the cuts to the student loan programs. Sen. Michael B. Enzi (R-Wyo.), the committee's chairman, said the panel would use $2.5 billion of those added savings to increase to $8 billion funds for the two temporary grant programs, providing for "unprecedented new grant aid for low and middle income students."

To the consternation of college lobbyists, who objected when the idea was first raised last month, Enzi also said the panel would put another $1.5 billion in unexpected savings from the loan program toward as-yet-undefined "Katrina-related aid." "I will offer an amendment to the reconciliation bill on the [Senate] floor that directs the use of these funds," Enzi said. (College lobbyists said Tuesday that they had been told that $118 million of those funds would be made available for purposes related to higher education, with most of the rest going to elementary and secondary schools.)

Sen. Edward M. Kennedy (D-Mass.), the Senate panel's top Democrat who drafted the Higher Education Act bill with Enzi, said in somewhat reluctantly supporting the reconciliation bill Tuesday that he found the effects of the reconciliation process "enormously troublesome." Congress felt pressure last spring to seek to cut $35 billion in mandatory spending, he said, only because Republican leaders pushed through a series of tax cuts that predominantly help wealthy Americans. Cutting worker pensions and raising interest rates for student loan borrowers to pay for tax cuts and the new needs generated by Katrina is "unconscionable," he said. Still, Kennedy voted for the bill, while five of his Democratic colleagues opposed it (it passed 15-5).

That's where things stand -- for the moment. But Thursday, the process, and the task for lawmakers, could get even more complicated, as the House is due to vote on legislation that would increase to $50 billion, from $35 billion, the total amount its committees would need to cut to redirect toward closing the deficit.

If that happens, the House Education and the Workforce Committee would presumably be asked to slash even more money from the programs it oversees, and given that it is already reported to be short of meeting its $12.6 billion goal, having already proposed cuts to student aid programs that college leaders and advocates for students find painful, the situation could be about to get worse for them. 


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