Is Higher Ed Act Renewal Dead?

Momentum to enact key legislation may be undercut by budget measure and political climate on Capitol Hill.
January 12, 2006

For nearly three years now, dozens of Congressional aides and college lobbyists have poured their time and energy into the process of renewing the Higher Education Act, the law that governs most federal student aid and other college programs. The heavy lifting has been done, and the job is nearly complete.

But after a wild and woolly Congressional session in which the measure’s renewal became entangled in a web of other political and legislative concerns, and key parts of the law were attached to a budget balancing measure, it is by no means assured that Congress will even enact a full Higher Ed Act bill this time around. (Most observers put the odds at about 50-50.)

And for at least some college officials, failure to renew the law would be just fine, as they fear that any bill Congress passes at this point might do more harm than good. “There’s nothing in there that would make us think that the changes are better than what’s in [the law] now,” says Sarah A. Flanagan, vice president for government relations and policy for the National Association of Independent Colleges and Universities. Other groups -- supporters of for-profit colleges, for instance, which would gain significantly in the Higher Ed Act legislation as currently drafted -- hope it will become law.
Whether that will happen could depend on the interplay of a wide range of factors, including obvious things like the priorities of the Congressional education committees and less-obvious ones such as the lobbying scandal currently enveloping Capitol Hill -- and the fact that 435 House members and a third of all senators are up for election this year.

But before breaking down what might occur going forward, let’s take a step back to see how the situation got to this point, given a set of events that even the most seasoned of higher education Congress watchers say has frequently confounded them.

The Setup

The Higher Education Act is the most significant piece of legislation for American colleges, setting the rules for Education Department programs on accreditation, international and graduate education, teacher training and, most notably, dozens of financial aid programs for students. Congress must renew it every five or six years -- or extend the existing law as is -- to provide formal authority to keep the programs running. The law was last renewed, or “reauthorized,” in 1998.

This reauthorization process has unfolded in fits and starts. Congress failed to complete work on the measure in 2004 amid colleges' unhappiness over provisions they derided as “price controls” and other kinds of inappropriate intrusion into their affairs.

The decision to delay the reauthorization to 2005 proved fateful, because it enabled House and Senate leaders to link the higher education measure to a rarely used legislative process, known as “budget reconciliation,” through which Republican Congressional leaders hoped to shave tens of billions of dollars from federal mandatory spending programs. Reconciliation last occurred in 1997.

That entanglement mattered because budgeters had long eyed perceived savings that could be wrung from excess subsidies to lenders and other funds in the federal student loan programs. College lobbyists had hoped those savings could be used to boost funds for financial aid; after all, the promise of new benefits for students is the big potential upside of the Higher Education Act reauthorization for college officials, balancing the sometimes unpleasant regulatory changes lawmakers seek to impose.

But wedding the reauthorization bill to the budget reconciliation process opened the way for the Republican-led Congress to use those funds for other purposes -- either cutting the budget deficit, as Republican leaders described it, or cutting taxes, as Democrats framed it.

As the House and Senate education committees worked through the summer and fall to craft their Higher Education Act bills, they wove the legislation with the budget cutting process in different ways.

Explaining how could fill a short book, but the gist is that leaders of the Senate Committee on Health, Education, Labor and Pensions, working in a bipartisan way, sought to reinvest more than $8 billion of the student loan savings to create two new grant programs for students from low-income families, particularly those with an interest in science and math. Republican leaders of the House Committee on Education and the Workforce planned to modestly increase funds available for Pell Grants and other purposes, but focused heavily on producing the maximum amount of funds for the broader budget cutting process, much to the dismay of advocates for colleges and students.

In the waning days of December, as Congress rushed to adjourn, both houses passed a compromise $40 billion budget cutting bill containing $12.7 billion in “savings” from the student loan programs, much of which would come from requiring lenders to return to the federal government funds they receive when borrowers pay a higher interest rate than the one lenders are guaranteed to receive. (Whether those funds come out of the pockets of lenders or of students and parents is hotly debated.) The budget measure would direct $3.75 billion of the savings from the loan programs to create a new (but temporary) grant program aimed at encouraging low-income students to enter scientific fields, although the legislation jettisoned the part of the larger Senate plan that appealed most to college officials because it would have been available to a broader array of needy students with fewer strings attached.
The budget reconciliation bill also included measures that would normally have been part of the Higher Education Act renewal, including raising loan limits for many students, ending a rule that bars colleges from giving federal student aid if they offer more than half their courses online, and making more low-income students automatically eligible for the maximum Pell Grants.

Although the budget bill passed both houses, the versions approved by the House and Senate differed ever so slightly because of procedural maneuvering by Democrats, which means that the House must take the measure up again when Congress reconvenes in early February.

Where It Goes From Here

So what happens next with the Higher Education Act reauthorization?

The first question is whether Congress completes passage of the budget reconciliation measure. Although most Hill watchers predict that lawmakers will ultimately pass the budget bill, some college lobbyists hold out hope that members of the House, who voted on the mammoth compromise legislation in the wee hours of one morning just hours after they got their first glimpse of the bill, will “take a deeper look at it and not be so quick to rubber stamp” it this time around, says Edward M. Elmendorf, senior vice president for governmental relations and policy at the American Association of State Colleges and Universities.

Assuming that doesn't happen and the budget bill passes, a bunch of scenarios are conceivable with regard to the Higher Ed Act reauthorization. Several possibilities include: (1) negotiators from the House and Senate could agree on and pass a full-blown bill that contains all of the provisions that were not included in the budget measure; (2) lawmakers could put together legislation that contains selected Higher Education Act provisions that are perceived to be crucial (or politically desirable), as well as measures that fix flaws that have been or will be identified in the budget legislation; or (3) Congress could just extend the remaining parts of the higher education law in their current form for a year or even five years. Congress passed a bill in December that temporarily extended the Higher Ed Act through March.

Right now, education aides in the House and Senate are insisting that they plan to fully reauthorize the Higher Education Act. “There’s a lot that was not done” in reconciliation, and “there will continue to be momentum” to complete work on a bill that “we’re so close to finishing,” said one Congressional staffer, who as is common practice on Capitol Hill asked not to be identified. Education committees in both chambers have passed bills that are ready for consideration by the full House and Senate; the bills differ in some significant ways, though, so once passed, lawmakers from the two bodies would have to work out a compromise version, which might be no easy task.

Those interviewed for this article cite a range of factors that are likely to influence whether that comes to pass, although even those who agree on the factors sometimes see them cutting in different ways. Among them:

Electoral politics and Congressional scandal. This is an election year in Congress, and the Jack Abramoff lobbying scandal and President Bush’s poor poll numbers have Republicans deeply worried and Democrats feeling emboldened about their chances for making significant gains in November. The Abramoff controversy has already produced one potentially direct impact on the Higher Education Act deliberations, as the influential head of the House education committee, Rep. John A. Boehner (R-Ohio), announced his decision this month to seek to replace Rep. Tom DeLay (R-Tex.), who stepped aside as House Majority Leader after being ensnared in the Abramoff affair.

Boehner has been the driving force behind the reauthorization effort in the House, and if he abandons his committee post to become Majority Leader, that could undercut momentum on the panel to push the bill through, especially given the fact that the chief Republican aide on the House committee, Alison Griffin, quietly left her job at the end of December to join the Chartwell Education Group, a Washington lobbying group led by the former U.S. secretary of education, Rod Paige.

Boehner’s likely replacement, Rep. Howard P (Buck) McKeon (R-Calif.), heads the higher education subcommittee but has largely taken a backseat to Boehner during this reauthorization process (a “third wheel,” one higher education lobbyist called him). The provisions in the House bill that he is seen as caring most deeply about -- those that would require significantly more public disclosure about colleges’ prices and other matters -- may be unlikely to survive in a compromise with the Senate legislation, which takes a much gentler approach to the college cost issue.

The Republicans’ disarray could also hurt the chances of a full reauthorization by emboldening Democrats to fight a bill they largely oppose and take their chances that they might be able to shape a better measure in a 2007 Congress that contains more members from their party (or that, in their fondest hopes, they control).

Other college lobbyists say the Republicans’ problems could make a full reauthorization more likely. In this scenario, Republican leaders, seeing the newspapers filled with headlines about ethical lapses, will want to engage in a flurry of legislative action on important issues like education to show that they mean business (and distract attention from the scandal and the war that is dragging down President Bush’s poll numbers). The Bush administration unveiled a new effort on international education this month, and some higher education officials expect the president might hatch more postsecondary ideas in his State of the Union speech and 2007 budget.

What college groups want. Ultimately, the decision about whether a full-blown reauthorization bill emerges will be based on whether lawmakers want it. But higher education groups might have at least some influence on that decision. Not surprisingly, whether the various college associations want the reauthorization to proceed depends largely on how happy or unhappy they are with what would ultimately be in that bill -- and how it would help or hurt their constituents.

Nancy Broff, general counsel of the Career College Association, which represents for-profit institutions, predicts that Congress will pass a Higher Education Act bill that finishes what the budget reconciliation measure started, “because there’s a bunch of other stuff that people care about that hasn’t been handled yet, and much of it is noncontroversial,” such as provisions that would renew and strengthen the Pell Grant Program and changes in teacher training programs.

While much of what the Higher Education Act does is noncontroversial, this bill, like any extension of the law, includes a slew of measures to which various college groups do object -- and which makes some of them disinclined to want to see it enacted. Nonprofit institutions have aggressively fought several measures that would strengthen the standing of for-profit colleges, which have contributed heavily to members of Congress, as well as provisions that would significantly increase reporting requirements on colleges and dictate their policies on accepting transferred credits in ways they deem heavy-handed.

The fact that some remaining portions of the Higher Education Act legislation raise hackles -- and that Republicans may not be looking for a fight -- may increase the chances that Congress takes a piecemeal approach, passing a narrower bill that enacts certain aspects of the higher education law or attaching some must-have portions of the bill to other legislation that might move more easily through Congress.

Such legislation might also include a few provisions of the budget reconciliation bill that were dropped at the last minute because they were viewed as not germane to that measure, or aim to fix mistakes that were made in the last-minute drafting of the compromise budget measure (among them, the legislation apparently increased the interest rate for loans for parents in the guaranteed loan program to 8.5 percent, but failed to make a corresponding change in parental loans in the direct loan program).

What else is looming. One other factor that several of those interviewed raised was the prospect that any significant delays in passing a reauthorization bill could mean that the measure gets entangled with yet another seemingly unrelated process: the work of the Secretary of Education’s Commission on the Future of Higher Education.

When Margaret Spellings appointed that panel in September, some observers wondered why she had chosen to zero in on higher education issues at a time when the Higher Education Act reauthorization was almost done; if she really wanted to influence higher education policy, they reasoned, why didn’t she appoint a panel three years ago, when work on the HEA renewal was just beginning?

Ironically, the committee, which holds its next two meetings in the first half of February, could, if Congress does not move swiftly to pass the rest of the Higher Education Act bill, wind up seeing its recommendations (due by July) meshed with what’s left of the reauthorization legislation. Given some of the things the committee is talking seriously about – including some system for testing what students learn while in college – that could make the reauthorization process really interesting.


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