Reauthorization of the Higher Education Act
We are very pleased that S. 1882 incorporates the Administration's "Recruiting New Teachers for Underserved Areas" proposal and many components of our "Lighthouse Partnerships for Teacher Preparation" proposal. We have some concerns with the provisions of the proposed new part A of title II of the HEA, Teacher Quality, in particular the limited percentage of funds available for teacher preparation partnerships under subpart 2, and look forward to working with Congress to resolve those concerns as the reauthorization process continues.
The Administration appreciates the bill's strong support for the Federal Pell Grant program. We are particularly pleased that S. 1882 contains a version of the Administration's proposals to set new limits on the period during which a student may receive Federal Pell Grants in a way that accommodates students attending part-time and does not place onerous reporting burdens on institutions. We also support the bill's inclusion of the Administration proposal to make the Pell Grant Program eligibility of a stand-alone English-as-a-Second-Language program contingent on a minimum percentage of the program's graduates passing a standardized test. Both of these provisions will reduce the potential for program abuse. We are also pleased that a version of the Administration's proposed improvements to the tuition-sensitive award rule is included in S. 1882.
Federal TRIO programs
We are disappointed that S. 1882 fails to include the Administration's proposal to allow priority points to be given to TRIO applicants proposing projects in underserved geographic areas. This amendment would help the program respond to changing national demographics by encouraging the establishment of TRIO outreach services in areas currently underserved by these programs.
College Awareness Information Initiative
In addition to the inclusion of the Administration's High Hopes initiative in S. 1882, we also believe that S. 1882 should be amended to include provisions to support the Administration's proposed College Awareness Information initiative. This initiative would address the widespread problem of poor academic preparation for college and use the media to promote increased awareness of the value of a college education, the availability of student financial aid, and the academic planning and other steps that must be taken to prepare for postsecondary education. Information would be targeted to students at various grade levels beginning in middle school, parents, teachers, and counselors, as well as adults pursuing further education.
Federal Supplemental Educational Opportunity Grants
We are disappointed that S. 1882 does not amend the allocation formula for the campus-based programs (Federal Supplemental Educational Opportunity Grants, Federal Work-Study, Federal Perkins Loans) to increase gradually the portion of campus-based funds allocated based on "fair share." Such an amendment would reflect more accurately the current distribution of needy students. Allocations for most schools currently reflect the way in which program funds were distributed 20 years ago. An update of this formula is long overdue.
Federal Family Education Loan (FFEL) Program
Although S. 1882 purports to change the compensation of guaranty agencies to a fee-for-service basis, the bill in fact would create an improper incentive structure that provides excessive payments to guaranty agencies and rewards inefficiency. The provisions described below would collectively direct about $1 billion of federal funds to guaranty agencies and would result in poor guaranty agency performance, excessive taxpayer costs and missed opportunities to help needy students. These objectionable features of S. 1882 would:
We are also disappointed that the Administration's loan proration changes are not included in S. 1882. These provisions would be simpler for institutions to understand and administer, and would be more equitable to students.
- Allow the unjustified use of Federal funds held by guaranty agencies -- in some cases to subsidize their competition with for-profit companies -- and create financial incentives to neglect the taxpayers' interests in the management of Federal funds.
- Stifle innovation and accountability for results by unduly restricting the scope of the voluntary, performance-based agreements that the Secretary may enter into with guaranty agencies.
- Establish an excessive portfolio maintenance payment to guaranty agencies. We understand that amendments may be offered to restore the funds available to the Department under section 458 to the levels established in the Balanced Budget Act of 1997; if these amendments also reduce the level of the portfolio maintenance payment, it would be a step in the right direction. We would like to continue to work with the Congress to reduce the level of these payments to more acceptable levels.
- Discourage guaranty agencies from preventing loan defaults by providing them with potentially much larger payments for collecting on loans after they default, totaling at least $644 million above the reasonable range of collection costs over five years.
- Spend unnecessarily $183 million in taxpayer dollars over five years by paying guaranty agencies to bring delinquent loans back into repayment, when lenders already perform this function at no cost to the taxpayer.
We are concerned that the loan forgiveness provisions for teachers and child care workers in S. 1882 are needlessly complex and administratively cumbersome as currently drafted. We would like to work with the Congress to improve these provisions.
We are pleased that S. 1882 includes provisions based on Administration proposals related to electronic exit counseling, information verification on PLUS loans, delegation of authority, the posting of surety during the appeal of an elimination of eligibility on the basis of cohort default rates, and the qualified exemption provided to Historically Black Colleges and Universities from elimination on the basis of cohort default rates. However, we do not support the use of the program participation index in the process for determining cohort default rates (as opposed to using this index in the appeal process), and would like to work with the Congress further on this aspect of the bill.
We support the provisions of S. 1882 that would prohibit consolidation of loans that are subject to a judgment secured through litigation or a wage garnishment order. These provisions would provide essentially the same result as Administration proposals on this issue. We also support the bill's provisions that would provide an extended repayment plan for FFEL borrowers with outstanding loans of more than $30,000. This is a step in the right direction, and would provide for greater comparability between the repayment options available for FFEL and Direct Loan borrowers. The Administration would also like to work with Congress to add further amendments to S. 1882 that would improve the terms of FFEL Consolidation Loans to match the terms of Direct Loans.
Federal Direct Loan Program
The Administration is disappointed that S. 1882 fails to exclude from Federal taxation the amounts forgiven after the maximum number of years of income-contingent repayment. Income-based repayment ensures that the borrowers who remain lowincome relative to their debt do not have to carry that burden for more than 25 years. Saddling them with an additional tax liability is neither appropriate nor was it ever intended.
Federal Perkins Loan Program
We are disappointed that the Perkins Loan forbearance provisions, including mandatory forbearance on Perkins Loans during a term of national service, were not expanded for comparability with the forbearance available under the FFEL program.
With regard to the Perkins revolving account, we understand that technical corrections will be made to retain sections 467(a) and (b) of the HEA, and support that correction.
The Administration is pleased that S. 1882 moves toward the Administration's higher income protection allowances for dependent students and independent students without dependents. Students should be given help and incentives to work and save for postsecondary education, and to do so without jeopardizing the amount of aid that would otherwise be available. The Administration would prefer that S. 1882 also be amended to change the treatment of assets to encourage savings, increase fairness, and simplify the financial aid process for students and families. The Administration's reauthorization proposal includes language to achieve these goals.
We would also prefer that S. 1882 be amended to include language clarifying that adjustments made by financial aid administrators to determinations of need may be made to assist dislocated workers.
The Administration is disappointed that a number of its specific proposals to reduce burden, such as a much-needed simplification of refund requirements, were not adopted in S. 1882. We understand that amendments may be offered to add a variation of the Administration's refund proposal to S. 1882. If this amendment were added to S. 1882 on the Senate floor, it would be a major step in the right direction, although we hope to work with you further to resolve our remaining concerns on this issue.
The Administration is also disappointed that S. 1882 does not provide the Secretary with the authority to approve alternative versions of the Free Application for Federal Student Aid (FAFSA); this authority was provided in the Administration's proposal. The use of alternative free versions of the FAFSA, especially electronic versions, would reduce burden significantly for students and families while streamlining the aid award process and maintaining the integrity of the delivery system.
The Administration is pleased that S. 1882 includes the Administration proposal to authorize the Secretary to designate regulatory provisions that institutions or other entities may choose to implement before the otherwise applicable effective date. These changes would provide the Secretary and program participants with greater flexibility, as well as more lead time, in implementing regulations.
The Administration is also pleased that the bill provides express authority for the Secretary to develop and implement a multiyear promissory note that will simplify the loan application process for students, schools, lenders, and guaranty agencies.
The Administration is disappointed that S. 1882 does not do more regarding distance education, and hopes that the Senate will broaden the opportunity to participate in this program further. We understand that amendments may be offered to eliminate the bill's excessive restrictions on participation in the proposed distance education demonstration program, and to provide other administrative flexibilities necessary for the success of the program. Such amendments would greatly improve these provisions of S. 1882. In addition, the Administration's Learning Anytime Anywhere Partnership initiative would encourage partnerships to develop innovative ways of delivering education, ensuring quality, and measuring student achievement that are appropriate to distance learning.
The Administration opposes the provisions in S. 1882 concerning the Quality Assurance (QA) and Experimental Sites programs. S. 1882 would unacceptably limit the waivers that would be available to institutions participating in the QA program to only those regulatory provisions that pertain to verification requirements. In addition, the bill would impose reporting requirements on the Secretary that would have to be fulfilled before any new participants could be added to the Experimental Sites program. The current programs have provided administrative flexibility from statutory and regulatory provisions to a number of institutions, and have a documented history of success without compromising accountability. The National Commission on the Cost of Higher Education also supported reducing regulatory burden through a performance-based approach.
The Administration also opposes the provision in S. 1882 that would suspend aid eligibility for students who have been convicted of any drug offense under Federal or State law. This provision would largely duplicate existing law denying Federal benefits to individuals convicted of a drug offense under Federal or State law. Current law also contains important judicial discretion provisions that are lacking in S. 1882.
We are disappointed that S. 1882 does not provide for the reporting of performance-based information by occupationally-related programs that would assist students in making informed choices.
The Administration has several strong objections to the institutional oversight provisions in S. 1882. We strongly oppose the S. 1882 requirement that the Department of Education conduct program reviews based on specific criteria. The Department recently initiated a new approach to institutional oversight that determines the focus of program reviews by using information from a data-driven risk analysis system and the Department's information on institutional compliance with program requirements. This "case management" approach to oversight is much more effective at targeting institutions with compliance problems, as well as more cost-effective and less time-consuming for both institutions and the Department, than the approach in S. 1882. Moreover, this approach was also endorsed by the National Commission on the Cost of Higher Education.
We strongly oppose the provision in S. 1882 that would require the Department to make available the complete, unredacted program review guide. This requirement would undercut the Department's ability to monitor institutions effectively by forcing disclosure of information that could be used by a small minority of unscrupulous schools to evade monitoring. This provision is also unnecessary, since the Department provides virtually all of the program review guide, with only small portions redacted, to anyone who requests it under the Freedom of Information Act.
We also oppose the provision in S. 1882 that would require the Secretary to allow institutions to "cure" inadvertent administrative errors. It is unlikely that the Department would have the information needed in most cases to divine an institution's intentions and determine whether such errors are truly inadvertent. This provision would likely result in additional administrative burden and litigation over whether a violation was inadvertent, and whether the cure was sufficient.
We also oppose the lengthening of the recertification period from the current 4 years to 6 years. In many instances, this longer period is likely to be too long a period between the thorough institutional reexaminations of the recertification process, especially as the Department continues to refine its monitoring efforts by relying to a lesser degree on program reviews and more on other processes, such as recertification. Moreover, if the rationale for the longer period between recertifications is burden reduction, the Department's new electronic recertification application is expected to streamline the recertification process for both institutions and the Department.
While the Administration strongly believes in promoting the active involvement of the public and the education community in the development of student financial aid regulations, we are seriously concerned, based on our prior experience with regulatory negotiation, that the bill's overbroad scope and unrealistic time requirements would actually impede effective collaboration. In addition, the bill's apparent requirements that all future title IV regulations, no matter how technical or urgent, be subject to negotiated rulemaking, would seriously distort regulatory efforts and resources away from the most important issues and generate unnecessary litigation, delay, and expense. We understand that amendments may be offered that would address many of the Administration's concerns, and look forward to working further with Congress to develop an effective regulatory negotiation provision that includes priorities that are needed to achieve both broad community involvement and timeliness. Excessive, inflexible requirements imposed by Congress on this process would not serve the Department's customers.
Finally, we also oppose the provisions that would require the Secretary to conduct biennial reviews of regulations as overly intrusive on the Secretary's management of the Department.
The Administration shares the goal of adopting a performance-based organization (PBO) for the administration of the student aid programs. We understand that there may be amendments offered to S. 1882 that, if added to the bill, would address most of the Administration's concerns about personnel and procurement flexibility for the PBO.
In addition, the Office of Government Ethics has advised that the one-year cooling off post-employment restrictions in 18 U.S.C. 207(c) might not apply to the Chief Operating Officer and would not apply to the senior managers of the PBO under S. 1882 as currently drafted.
Advanced Placement Incentive Program
The Administration supports the reauthorization of the advanced placement incentive program, and would like to work with Congress to modify the program in order to encourage States to undertake activities, such as information dissemination, teacher training, and curriculum development, that would increase the participation of low-income students in advanced placement courses and exams.
Education of the Deaf Amendments of 1998
Finally, we are concerned with certain aspects of S. 1882's reauthorization of the Education of the Deaf Act, such as the change to the Federal endowment program provisions that would eliminate the requirement for each institution to reinvest 50 percent of its endowment income. This change would mean that no funds would have to be reinvested. One of the primary purposes of the Endowment Grant program is to create permanent, and increasing, sources of funds for enrichment activities and special projects. This purpose is compromised if there is no requirement for the funds to grow.
Return to Reauthorization page