Unanimity in the Senate

Higher Education Act bill that would reshape student loan programs passes 95-0. But some aid experts question how much major elements would really help students.
July 25, 2007

By a vote of 95 to 0, the U.S. Senate on Tuesday approved legislation to renew the Higher Education Act that would, among many other things, raise the ceiling for the maximum Pell Grant to $6,300, make it easier for students to apply for federal financial aid, sharply restrict the relationships between lenders and colleges, ramp up scrutiny of colleges that raise tuitions sharply, and scuttle the Education Department committee that recognizes accrediting agencies. The passage of the legislation means that within the space of five days, senators passed two mammoth bills -- the other a budget reconciliation measure that would shift billions of dollars in federal funds from lenders to students -- that could reshape federal higher education policy for years to come.

College groups and advocates for students offered bouquets of congratulation to senators for their work, praising the bipartisan nature of the measures and their overall thrust of trying to bolster access to higher education for students, particularly those from low-income families.

But as the dust began to settle on a frenetic few days of legislative activity, college leaders and lobbists they also began to ponder exactly what effect the changes contemplated by the measures -- at least those that survive the various steps of the legislative process that lie ahead -- would have, and whether they would ultimately be good for colleges and students. Opinions varied greatly, with some expressing significant concern about Senate provisions that would replace a current Education Department program that allows financially struggling students to repay loans based on their income with a different, unproven income-based repayment plan, and a proposed system for auctioning the right to provide federal loans that many observers see as unworkable.

Not surprisingly, there was no such equivocation from the chief sponsor of both Senate measures, Sen. Edward M. Kennedy (D-Mass.), chairman of the Committee on Health, Education, Labor and Pensions, who worked closely with the panel's top Republican, Sen. Michael B. Enzi of Wyoming, in shaping the two higher education measures.

"Today, the Senate made education a priority in this country again," Kennedy said after passage of the Higher Education Act bill, S. 1642, which would renew the law that governs most federal college programs for the first time since 1998. "Not since the G.I. Bill have we seen such a commitment to the nation’s young people and their futures.... Today’s victory isn’t just a win for America’s students and their families. It’s a victory for the American people, and an investment into the future of this country."

On balance, a significant number of college leaders agreed with Kennedy about the overall beneficial nature of the Senate legislation, which has been in the works for more than three years. Harris N. Miller, president of the Career College Association, which represents the country's 1,200 for-profit institutions, saw it as symbolic that Senate leaders had carved out several days of precious floor time in the heart of the legislative year -- and with issues of war, life and death competing for lawmakers' attention -- to work on the higher education bills.

"Slowly but surely, higher education is getting back on the policy agenda where it has been left off the last few years," Miller said. "The most important message I take from the Senate's work is that elected officials have realized that their failure to advance the cause of higher education has had a real negative impact on our educ system, our economy, and our global competitiveness.

"When you combine this with the appropriations bill that Congress passed in February," Miller said, "what I see is that after a substantial period of benign neglect of higher education ... we finally have Congress, and we hope ultimately the administration, saying that while there are a lot of pressing demands on the federal budget, we need to find more ways to give more students a higher education if we're going to be globally competitive."

Terry W. Hartle, senior vice president for government and public affairs at the American Council on Education, said he was heartened, at a time of intense political fracturing, by the bipartisan nature of the Senate-passed bills. "The 78-18 vote on budget reconciliation and 95-0 vote on reauthorization demonstrate that partisanship in national politics usually stops at the campus gate, and that members of Congress from both parties want to help low-income students finance higher education," Hartle said.

Hartle said that at the macro level, the Senate-passed bills -- and the budget reconciliation legislation passed last month in the House, too -- represent a "significant change in federal policy": "the biggest example I have ever seen of Congress saying, 'We're going to put the students not only ahead of the lenders, but way ahead of the lenders.' "

He and others tended to agree that that shift, reflected in cuts in federal subsidies for lenders and a proposed crackdown on lender-college relationships, among others things -- had been brought about not only by the Democratic takeover of Congress last fall, but by the investigations by members of Congress and New York Attorney General Andrew Cuomo into improper practices in the student loan industry.

Beyond the big picture, though, Hartle acknowledged, however, critics will probably find plenty not to like in the "1,000 pages of legislation" that senators approved in the last week. "What you will be seeing now is a lot more discussion about the efficacy" of the specific approaches the bills would take to achieve the overarching goals.

Barmak Nassirian is among those student aid experts who fear that for all the talk about how the Senate bills would help students, some of their provisions might do harm. Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers, praised the Senate budget reconciliation measure for cutting lenders' excess profits, as President Bush proposed doing in his budget proposal for 2008.

But some of the ways the Senate budget measure would go about spending those new revenues are troubling, he said. While Senate sponsors trumpet the fact that the legislation would create a new income-based repayment scheme for student loan borrowers, the bill would in turn eliminate the existing income-contingent repayment system that has proven a boon for "borrowers who are at the end of their rope," Nassirian said -- a "tragic mistake."

The Senate measure also embraces a flawed plan for auctioning off the right to make federal student loans, Nassirian said, and proposes spending much of the savings from the subsidy cuts for lenders on a new program of "Promise Grants" that many financial aid experts believe has major problems.

"It doesn't happen very frequently that the stars are aligned to enable significant political reform of the loan programs, but I wish we had a better sense of where we want to go," Nassirian said. "Cutting excessive profits is good. But if we're profligate with the proceeds, then perhaps we're better off" with the status quo.

Hartle of the American Council on Education and others urged critics to be patient. Senate passage of the two higher ed bills still leaves many steps in the legislative process. The budget reconciliation measure must be reconciled with a parallel measure in the House of Representatives that takes different approaches to spending the savings from lender subsidies and to the proposed loan auction, among other things. And the House has not even begun formal work on its own version of the Higher Education Act renewal. Factor in changes that the Bush administration might demand in both bills, and there are miles to go before the legislation is complete, Hartle said.

"If this were a baseball game, we'd be in the bottom of the fourth [inning]," he said. "So a lot can change, and we'll be working hard to further refine this important legislation."


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