Washington DC’s Climate of Change

Agenda Election and Political Landscape Policy Landscape The Budget Challenge HEA Reauthorization FAFSA and DRT Grants and Loans Legislative Activity 2

Election 2016 President Donald Trump won the electoral vote, didn’t win popular vote – similar to 2000 election. - Trump obtained 304 electoral votes to Hillary Clinton’s 227 with 47.5% of the poplar vote. Congress remained status quo - Republican majorities. - Reversing expectation - House: Democrats gained six seats - Senate: Democrats gained three seats 3

The 115th Congress House 241 Republicans on January 3, 2017 Now 239 (3 vacancies) 193 Democrats 114th Congress: - 247 Republicans - 188 Democrats Senate 52 Republicans 48 Democrats (including Independents) 114th Congress - 54 Democrats - 46 Republicans 4

Current Political Landscape Washington, DC – and the country at large – are still coming to terms with the results of the November election, even six months later. Republicans are still wondering if President Trump will help them in carrying out their agenda and if they can build a “governing coalition” over the next four years. Democrats are still recovering after “measuring the drapes” and determining how to function as the minority party. 5

Current Political Landscape Major jockeying by various players on who makes federal policy: Trump says Administration Ryan says Congress McConnell says…it depends…and that’s what will happen… 6

Current Political Landscape - Admin Trump Administration has been in office for 146 days – 100 day mark was April 29, 2017. Like previous Administrations, the White House is attempting to drive the policy agenda, based on campaign promises. (White House Domestic Policy Council set policy under Bush and Obama.) 7

Current Political Landscape - Admin Like previous Administrations, the White House is controlling the hiring process for federal agencies (Stroup nominated and confirmed mid-2002): Secretary Betsy DeVos – picked because of her leadership in the school choice arena No Deputy Secretary Acting Under Secretary Jim Manning – former Bush Administration official No Assistant Secretary for Postsecondary Education Same leadership at Federal Student Aid Some Special Assistants to the Secretary Left-overs from the “Benchmark Team” 8

Current Political Landscape - Admin Like previous Administrations, lack of policy knowledge and staff has resulted in early missteps since proposals have not been properly vetted and coordinated. Unlike previous Administrations, the current Administration is not bound by conventional wisdom (Cabinet selections weren’t chosen to please certain constituencies or build bipartisan support to get through Senate; media isn’t invited to certain events, etc.). 9

Current Policy Landscape - Agenda Early 2017 – January 1 through April 30, 2017 U.S. House – Completed repealing Obama-era regulations using the Congressional Review Act (including two education-related rules), passed FY 2017 budget reconciliation package but failed with healthcare reform. Senate – Completed confirmation of Cabinet, completed confirmation of Supreme Court Justice Neil Gorsuch, cleared what the Housed passed under CRA. 10

Current Policy Landscape - Agenda Mid-2017 – May 1 through August 31, 2017 Completed FY 2017 appropriations, trying again with healthcare reform, beginning FY 2018 budget and appropriations, starting discussions on tax reform, debt ceiling, confirmation of sub-Cabinet (Senate). 11

Current Policy Landscape - Agenda Late 2017 – September 1 through December 31, 2017 FY 2018 budget reconciliation/tax reform (and student loans?), FY 2018 appropriations, infrastructure package, Higher Education Act (more likely in 2018). 12

Current Policy Landscape Major interest from Congress, Administration, think-tanks, trade associations, consumer groups, etc., for higher education reform. Growing consensus on the main problems and challenges with the higher education system. - “How do you promote college access AND completion?” - “How do you improve institutional quality and hold institutions accountable?” - “How do you make college more affordable?” - “How do we ensure that students and families have access to more financial education and debt management services to help them understand their postsecondary education options?” - (New this year) “How do you get the private sector back into student lending?” 13

President’s Budget “Skinny budget” outline released by OMB doesn’t address Perkins or other loan programs. Calls for a 13 percent cut to ED programs, including eliminating SEOG, cuts to Work-Study. Transfer of a part of surplus that has built up in the Pell Grant account to the general Treasury. Cuts to GEARUP and the TRIO college prep programs for low-income students. Full Budget with details, proposals for all programs, expected mid to late May. 14

Current Policy Landscape – House HEA Reauthorization Process Committee completed hearing process in the 113th and 114th Congress, held total of 15 hearings. But new Chairs (Foxx/Guthrie), new Ranking Members (Scott/Davis), and 12 new members have restarted the hearing process (in April, held hearings on financial aid simplification and accreditation reform). Committee is more partisan than ever – Republicans think the feds and spending are the problem; Democrats think they are the solution. Introducing a series of narrowly-tailored, bipartisan bills (more transparency, more loan counseling, simplifying the FAFSA, etc.), but one comprehensive bill coming later. Wildcard: Will Republicans own Direct Lending? Where is the Trump Administration on higher education? 15

Current Policy Landscape – Senate HEA Reauthorization Process Largely completed hearing process in the 114th Congress. With same Chair, Ranking Member, and only three new members, likely to be a few hearings but not a lot. Committee remains non-partisan, but confirmation fights are souring Alexander and Murray relationship. Likely to resurrect its 2015-2016 process to break into various groups focused on financial aid, deregulation, sexual assault, etc. Republicans are focused on simplification and deregulation, including turning the Task Force on Higher Education Regulation recommendations (i.e., preferred lender list requirements) into legislation, and risk-sharing. Democrats have their own wish-lists, Murray to address homeless children, Gillibrand to address campus safety, Warren to allow borrowers to refinance their federal loans and wrap-in private loans, etc. Wildcard: Will Democrats, including Senator Elizabeth Warren, fight or work together? How will major exodus of staff to the Administration impact the process? 16

Current Policy Landscape With many moving parts, can consensus be achieved? Accreditation reform Borrower defenses to repayment Campus-based aid programs Capping Grad/Parent PLUS College cost proposals Competency-based education Debt-free college Discharging loans in bankruptcy Fair Value Accounting Federal/private loan refinancing Federal-state partnerships Federal student data system Financial education/literacy Gainful employment for all schools Income share agreements One loan, one grant program “Pell-Well” concept Private loan regulation Public Service Loan Forgiveness Repayment rates v. default rates Risk-sharing proposals Sexual abuse protections Simplifying repayment plans Student loan servicing changes Teacher preparation improvements 90-10 and other prop school issues 17

Streamlining Repayment and Preventing Overborrowing Streamline the myriad of repayment plans to help students and family borrowers. Improve the annual recertification process for borrowers in Income-Driven Repayment plans. Simplify the FAFSA to reduce the number of questions and length of time required to complete the form. 18

Streamlining Repayment and Preventing Overborrowing Provide authority to financial aid administrators to lower annual and aggregate loan limits. Consider capping the amount parents can borrower under the PLUS program. 19

Helping Students Make Smart Postsecondary Decisions Provide pre-college, in-school, and post-college financial education and debt management services to students, borrowers, and families. Strengthen existing entrance and exit counseling. Promote the use of 529 plans. 20

Public Service Loan Forgiveness FAFSA/DRT and PSLF Data Breach Impacts 100,000 Also Impacts Income-Driven Repayment Could be October 2017 for Fix Public Service Loan Forgiveness Must be enrolled in the correct IDR program with the correct type of loans. President’s budget proposes to eliminate the program based on OMB numbers. 21

Total Grant Aid SOURCE: The College Board, Trends in Student Aid 2016, Figure 4 For detailed data, visit: trends.collegeboard.org 22

Average Annual Amount Borrowed in Federal Loans SOURCE: The College Board, Trends in Student Aid 2016, Figure 7B For detailed data, visit: trends.collegeboard.org 23

Amount of Outstanding Education Debt SOURCE: The College Board, Trends in Student Aid 2016, Figure 8 For detailed data, visit: trends.collegeboard.org 24

Repayment Status of Federal Direct Loans SOURCE: The College Board, Trends in Student Aid 2016, Figure 10B For detailed data, visit: trends.collegeboard.org 25

Legislative Activity Subjects of Recent Bills in House and Senate -Immigration: HR 2070, HR 2071, HR 2072 -Simplification: HR 2015, S 799, HR 1283, S 749 -Pell Grants: HR 2007, HR 2084, S 900, S 840 -Veterans: S 882, S 844, HR 1956 -Institutional Requirement: S 888, HR 1767 -Loan Forgiveness: HR 1937 26