Update From Washington Brittny McCarthy Director, Federal Relations American Association of State Colleges and Universities (AASCU) August 15, 2007

Federal Higher Education Landscape Appropriations Budget Reconciliation Higher Education Act Negotiated Rulemaking

Appropriations Fiscal Year 2008 Labor-HHS-Education Appropriations House Full House passed a “Labor H” bill with largest increase to the maximum Pell Grant award in seven years– to $4,700. Includes increases to TRIO, GEAR UP, HSIs, HBCUs, and international and foreign language education. Senate Appropriations committee passed a bill that keeps Pell Grant frozen at $4,310- the fiscal year 2007 level. Boosts funding for TRIO and GEAR UP. No floor action taken before August recess.

Appropriations Analysis Differences in House and Senate Priorities Veto Threats Relationship with budget reconciliation Omnibus? Government shut down? Veto threat President will veto all non defense spending above his budget. Education budget, on both House and Senate side provide more funding than president. Final passage was 276-140.  That is 66.3 %   66.7%  is a veto override.    19 members didn’t vote. About 50 Rs.  59 Rs would lock in an override if all 435 voted. New fiscal year begins Oct 1.

Budget Reconciliation What is “budget reconciliation”? House and Senate have passed (very different) “budget reconciliation” bills. House: The College Cost Reduction Act of 2007 (H.R. 2669) Senate: The Higher Education Access Act of 2007 (S. 1762) Budget reconciliation is different from the annual appropriations process in that it directs policy changes to mandatory spending, rather than discretionary spending that is done through the appropriations process, to achieve a budget goal as outlined in the budget resolution process. This Congress is using this budget reconciliation to find savings in lender subsidies to direct new spending towards student aid and other education programs. These reconciliation bills are in addition to any pieces of legislation the House and Senate will consider to reauthorize the Higher Education Act. $750 million dollars in savings. You can spend money to save money.

Budget Reconciliation Bills Need to be Reconciled Both bills decrease lender and guaranty agency (GA) subsidies to pay for new mandatory spending on education programs. House: Reduces lender and GA subsidies by $37 billion over 10 years. Senate: Reduces lender and GA subsidies by $42 billion over 10 years. "special allowance payment“ reduces what the government pays lenders for defaulted loans to 95 cents for every dollar from 97 increases for-profit lender origination fees to 1% from 0.5% cuts the guarantee agency collection fees to 16% from 23% eliminates "exceptional performers" if they are in "substantial compliance" with loan servicing requirements.

Budget Reconciliation Bills Need to be Reconciled Pell Grants House: Dedicates $19 billion to new Pell funding over 10 years, using current Pell program structure. Senate: Dedicates $30 billion in new Pell Grant funding over 10 years, creating a new parallel structure. Student Loan Interest Rates House: Reduces borrower interest rate for new subsidized Stafford loans over five years from 6.8 percent to 3.4 percent. Senate: No similar provision 6 for ‘06

Budget Reconciliation Bills Need to be Reconciled Student Loan Limits House: Increases the Stafford undergraduate dependent loan limit from $23,000 to $30,000. Senate: No similar provision Teacher Grants House: Creates the TEACH grant program for students who agree to teach specific high-need subjects for at least four years in high needs schools.

Budget Reconciliation Bills Need to be Reconciled Economic Hardship Student Loan Deferment House: Establishes a new Income-Based Repayment (IBR) plan and retains current Income Contingent Repayment (ICR)program Senate: Also creates an Income-Based Repayment (IBR) plan, but eliminates current ICR. College Costs House: Creates a system by which colleges would be added to a "list" if their tuition increases exceed a certain level Senate: No similar provision

Budget Reconciliation Bills Need to be Reconciled What now? Conference Committee Compromise Veto Threat

Reauthorization of the Higher Education Act House Has not yet introduced a bill to reauthorize the HEA. A bill is expected this fall. Senate On July 24, the Senate passed the Higher Education Amendments Act (S. 1642) 95-0.  The bill would raise the authorized level for a maximum federal Pell grant for eligible students to:      —$5,400 for academic year 2008-09.     —$5,700 for academic year 2009-10.     —$6,000 for academic year 2010-11.      —$6,300 for academic year 2011-12.  The bill would expand the information that the secretary would make available to the public on an annual basis regarding college costs and academic programs. The bill would add new institution and lender reporting and disclosure requirements. Changes to teacher preparation/education grants

Senate Higher Education Act Provisions of Note Accreditation and transfer of credit language Earlier versions of language identified by higher education community as “troubling” were amended. State higher education data pilot program Senator Daniel Akaka (D- HI)- to include Native Hawaiians as groups underrepresented in graduate education for purposes of the Ronald E. McNair post-baccalaureate achievement program Senator Barbara Boxer (D-CA)- to strengthen the Upward Bound program Senator Richard Burr (R-NC)- to further simplify the process of applying for Federal financial aid Senator Richard Burr (R-NC)- to address teacher development Senator Jim DeMint (R-SC)- a study regarding the employment of postsecondary education graduates Senator Byron Dorgan (D-ND)- regarding the development of a student loan clearinghouse Senator Senators Richard Durbin (D-IL) and Tom Harkin (D-IA) -loan repayment for prosecutors and public defenders and for civil legal assistance attorneys Senator Jeff Sessions (R-AL)- to address the quality and integrity of graduate medical schools located outside of the United States Senator John Warner (R-VA)- a digital and wireless network technology program

Senate Higher Education Act Senate Floor Consideration of HEA Eight amendments were passed by voice vote. Two amendments received roll call vote: Brown Amendment, failed 37-54 Coburn/Kennedy Amendment, passed 93-0 Several amendments expected to be offered, were not. Textbooks, P2P file sharing, and reporting of the relationship between Pell Grants and increases in tuition.

Questions? AASCU CONTACTS Ed Elmendorf Sr. Vice President for Government Relations elmendorfe@aascu.org Brittny McCarthy Director of Federal Relations mccarthyb@aascu.org Dan Hurley Director of State Relations hurleyd@aascu.org Pat Smith Policy Scholar smithp@aascu.org AASCU Headquarters 202-293-7070 www.aascu.org