Archived Information

Reauthorizaiont of the Higher Education Act

HEA General Provisions

General Provisions

While we support the general merging of the definitions of an "institution of higher education" for title IV of the Higher Education Act of 1965 (HEA) and the HEA in general, we oppose the changes to the "85/15" element of the definition of a proprietary institution of higher education. By including revenues that a proprietary institution derives from job training contracts in the 15 percent minimum amount of revenues that a proprietary institution must derive from funds other than title IV of the HEA, H.R. 6 would seriously undercut the intent of that provision, which is to ensure that the quality of the programs eligible under the 85/15 provision is sufficiently high to attract individuals who are willing to pay for the programs out of their own pocket, and to show that the proprietary institution is not primarily dependent on public funding for its existence.

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.

Performance-based Organization

While the Administration shares the goal of adopting a performance­based organization (PBO) for the administration of the student aid programs, the bill fails to include the desirable personnel and procurement flexibility while ensuring the PBO's accountability for the exercise of that flexibility. Moreover, the bill contains unclear language regarding the scope of the PBO's authority that, if unresolved, would cause administrative confusion and compromise the PBO's effectiveness.

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) would likely not apply to the Chief Operating Officer and the five senior managers of the PBO under H.R. 6 as currently drafted.

Postsecondary Education Improvement Programs

In addition to our very strong objections to the elimination of the funding authority for the National Board of Professional Teaching Standards, the Administration strongly objects to many of the bill's other provisions regarding teacher education. Block grants to the Governors are an inadequate substitute for the Administration's Lighthouse Partnerships initiative. These provisions would do little to produce urgently needed systemic improvement to pre-service teacher education. Our Nation also needs more teachers, and the bill fails to include sufficient efforts to recruit new teachers in order to address pressing needs for teachers in urban and rural areas.

The Administration supports the reauthorization of the advanced placement fee payment program, but 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 are designed to increase the participation of low-income students in advanced placement courses and exams.

Institutional Aid

The Administration is encouraged by the bill's support for developing institutions; helping more low-income Americans prepare for and go to college is a high priority for the Administration.

However, we believe that H.R. 6 needs to be amended to add the authority for the Secretary of Education's authority to use a small percentage of title III program funds for administration. These funds are needed to effectively manage the title III programs, including the provision of technical assistance to potential applicants and current grantees.

Student Assistance

Pell Grants

Helping to ensure access to higher education for all Americans at the lowest possible federal cost continues to be one of the highest priorities for the Administration, and the Administration appreciates the bill's strong support for the Federal Pell Grant program. We are pleased that H.R. 6 would enhance program accountability by terminating the Pell Grant program eligibility from the Pell Grant program for institutions with high student loan default rates, although we would like to work with Congress further on the precise language of this provision.

Federal TRIO programs and related programs

We are also encouraged by the bill's support of the TRIO programs, although we would urge that the bill be amended to include the Administration's proposal to assist underserved geographic areas. We are pleased to see that H.R. 6 includes a number of other changes that the Administration proposed to improve the management of these vital programs. However, the bill includes some provisions that would hamper the Department's ability to manage the TRIO programs, including the elimination of the authority to use a small percentage of the funds appropriated for administration. At a time of increased emphasis on program accountability and customer service, these funds are needed to effectively manage the TRIO programs.

The Administration is pleased that H.R. 6 would authorize the Administration's High Hopes initiative. The bipartisan support for High Hopes reinforces the belief that more needs to be done to reach whole cohorts of disadvantaged students at even younger ages. High Hopes would build upon TRIO activities and provide over 1 million needy middle-school students with effective information, tutoring, mentoring, and academic preparation to prepare them for college and deepen their aspirations and commitment to pursue postsecondary education.

We are disappointed, however, that H.R. 6 does not include provisions to support the Administration's proposed College Awareness Information initiative. This initiative would 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 high school students, parents, teachers, and counselors, as well as adults pursuing further education.

Federal Supplemental Educational Opportunity Grants

We are pleased that H.R. 6 would alter the allocation formula for the campus-based programs (Federal Supplemental Educational Opportunity Grants, Federal Work-Study, Federal Perkins Loans) in response to the changing demographics of disadvantaged students. While we believe that more needs to be done to accomplish this goal, the provisions of H.R. 6 are a step in the right direction.

Federal Family Education Loan (FFEL) Program

Although H.R. 6 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 H.R. 6 would: We are, however, pleased to see that the provisions of H.R. 6 that would authorize the Secretary to enter into voluntary flexible agreements with up to six guaranty agencies would include the authority for the Secretary to waive or modify related statutory requirements. This waiver authority is vital to the successful implementation of the proposed voluntary agreements.

Next, H.R. 6 fails to include a provision that would require the Secretary to pay the interest that accrues on an unsubsidized FFEL or Direct Loan while the borrower is receiving an economic hardship deferment on the loan and performing community service. This important proposal is part of the President's call to action to all Americans to serve their communities, and would allow individuals with student loans who qualify for economic hardship deferments to take up to three years to serve their communities without accruing additional interest on their loans. This would remove a financial obstacle to community service for borrowers who already satisfy economic hardship criteria. We urge that this provision be added during floor consideration of H.R. 6.

The Administration also hopes that the terms of FFEL consolidation loans will be improved to match the terms of Direct Loans. Further, the Administration opposes allowing lenders to establish a minimum balance for processing consolidation loans.

We strongly oppose the provision that would eliminate the current law "anti-injunction" provision that provides that injunctions cannot be issued against the Secretary that would interfere with the discharge of the Secretary's responsibilities under the loan programs. This provision has prevented the continued flow of loan funds to institutions during lawsuits brought by those institutions whose FFEL program eligibility has been terminated by the Secretary on the basis of high cohort default rates. In none of the cases in which injunctions were denied has an institution been able to show that its default rates were under the threshold for losing eligibility. The case law is very settled on this matter, and it would undermine program integrity to undo this well-established precedent--institutions are now less likely to attempt to sue the Secretary to obtain an injunction that would continue the flow of FFEL funds for the duration of a complex lawsuit.

We are also disappointed that the Administration's loan proration changes are not included in H.R. 6. These provisions would be simpler for institutions to understand and administer, and would be more equitable to students.

We are concerned that the loan forgiveness provisions in H.R. 6 are unworkable as currently drafted. We would like to work with the Congress to improve these provisions.

Federal Work Study

H.R. 6 would add several burdensome requirements to this program that the Administration opposes. First, it would add a requirement that two percent of an institution's allocation (in addition to the current five percent community service requirement) be spent on early childhood reading tutors. Two percent equates to about only 20,000 students program-wide. In addition, the bill's priority for particular schools for tutoring would also unnecessarily complicate institutions' administration of the program. The Department has had great success with its current voluntary partnership approach to America Reads tutors, and prefers to continue with that approach.

William D. Ford Federal Direct Loan Program

The Administration is disappointed that H.R. 6 fails to exclude from Federal taxation the amounts forgiven after the maximum number of years of income-contingent repayment. Income­based 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 oppose the use of the Perkins revolving account to subsidize loan forgiveness for teachers in the FFEL and Direct Loan programs. If the availability of this important resource is taken away from the Perkins Loan program, Congress would need to provide an offsetting iincrease in discretionary appropriations for Perkins Loan Federal Capital Contributions in order to avoid reducing loan volume. We understand that technical corrections will be made to retain sections 467(a) and (b) of the HEA, and support that correction.

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.

Need Analysis

The Administration is pleased that H.R. 6 includes 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 also supports changing the treatment of assets to encourage savings, increase fairness, and simplify the financial aid process for students and families. H.R. 6 currently would combine parent and student assets in the calculation of need for student financial assistance for dependent students, and this is a step in the right direction.

We would also prefer that H.R. 6 be amended to include language clarifying that adjustments made by financial aid administrators to determinations of need may be made to assist dislocated workers.

General Provisions

The Administration is disappointed that a number of its specific proposals to reduce burden were not adopted in H.R. 6. The bill does not allow schools to use new technologies to provide exit counseling electronically and does not simplify the refund requirements.

The Administration is pleased that the bill provides authority for the Secretary to develop and implement a multi-year promissory note that will simplify the loan application process for students, schools, lenders, and guaranty agencies. However, even though the Department currently provides an electronic financial aid application (the FAFSA) on the World Wide Web and fully supports further improvements to electronic access for students, we have serious concerns about the proposal in H.R. 6 which would require the development of an electronic FAFSA. This proposal contemplates the collection of signatures after the the submission of the application, which would place an unreasonable burden on schools, inconvenience students, and create an unworkable situation regarding verification of parental data. Instead, the Department is working towards a full utilization of electronic signatures. We would welcome the opportunity to work with you to develop this process.

The Administration is also encouraged with some of the provisions regarding distance education, especially those that adopt the Administration's language to require accrediting agencies to ensure quality and accountability through the development and enforcement of related criteria, and include computers and equipment in a student's cost of attendance. H.R. 6 does not respond sufficiently to the changing environment, and restricts access at a time when educational opportunities continue to grow. In addition, including 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 H.R. 6 that would create a misleadingly named Regulatory Simplification Program and eliminate the current Experimental Sites and Quality Assurance programs. These 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 H.R. 6 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 H.R. 6.

We are disappointed that H.R. 6 does not provide for the reporting of performance-based information by occupationally-related programs that would assist students in making informed choices.

The Office of Government Ethics has advised that the applicability of the ethics statutes to members of the Advisory Committee on Student Financial Assistance that are appointed by Legislative Branch officials needs to be clarified.

Program Integrity

Some provisions of H.R. 6, such as those adding flexibility to recertification and change of ownership requirements, would reduce institutional burden without sacrificing program integrity. However, other provisions in the bill, such as the changes to the financial responsibility requirements, are contrary to ensuring high quality and protecting the Federal fiscal interest.

On financial responsibility, the bill contains confusing language that could be read to override the well-received regulations that the Department, working closely with the community, recently developed and to establish a dangerously low standard for the financial health of institutions participating in student financial aid programs. The Federal responsibility to protect taxpayers and students in this area should not be compromised.

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 Administration strongly opposes the bill's apparent requirements that all future title IV regulations, no matter how technical or urgent, be subject to negotiated rulemaking, which would seriously distort regulatory efforts and resources away from the most important issues and generate unnecessary litigation, delay, and expense. We look forward to working with Congress to fashion a more focused and flexible set of regulatory provisions.

The Administration also strongly opposes the H.R. 6 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 and is more cost-effective than the approach in H.R. 6. Moreover, this approach was also endorsed by the National Commission on the Cost of Higher Education.

International and Graduate Education Programs

H.R.6 adopts the Administration's proposal to consolidate all graduate fellowship programs. However, since it has always been an important Federal objective to provide equal opportunity for historically underrepresented populations, it is disappointing that the bill did not include the Administration's proposal to do so in the graduate programs.

We oppose the inclusion of the new Institutional Development authority as duplicative of current international affairs programs and grants provided under title III.

Amendments to the Education of the Deaf Act of 1986

We are also concerned with certain aspects of H.R. 6's reauthorization of the Education of the Deaf Act, such as the Federal cost of subsidizing international students, coupled with the provision to eliminate the cap on enrollment of international students. The current tuition charges for these students are insufficient to cover the educational costs related to their attendance. Elimination of the cap, without a corresponding increase in the tuition surcharge for international students, would result in Federal resources being diverted from other areas to cover these costs.


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