Archived Information

Reauthorization of the Higher Education Act

August 7, 1998

I am pleased that versions of H.R. 6, a bill to reauthorize the Higher Education Act of 1965 (HEA), have passed both the Senate and the House, and I greatly appreciate the hard work that you and your staff have devoted to this important legislation. I am especially pleased that both versions of H.R. 6 have adopted the student interest rate on new loans at the level proposed by the Vice President last winter. This will help students better manage their postsecondary education debt and thus make college more affordable.

We now have the opportunity to work together during the conference deliberations to enact a strong bipartisan bill that will help more Americans prepare for and gain access to college, improve teacher recruitment and preparation, and promote better program management. In this work, we must all keep our focus on the goal of producing legislation that is grounded in sound educational and fiscal policy to provide maximum benefits to students. That is the ultimate purpose of the Higher Education Act.

The Administration is working with the Congress to resolve cost estimating differences between OMB and CBO and develop mutually agreeable legislative language that would eliminate the risk of a Government-wide sequester as a result of its passage. However, there remain a number of other extremely serious issues that must be resolved in order for me to be able to recommend that the President approve the conference bill. These include ensuring that there are no reductions in the student aid administrative funds available to the Department to administer both the Federal Family Education Loan and Federal Direct Loan programs; and offering borrowers the same low interest rates on FFEL Consolidation Loans as on Direct Consolidation Loans.

I am confident that these and the other important issues presented by the versions of H.R. 6 now in conference, and explained further in this letter and attachment, can be resolved in a manner that serves students well by our working together in good faith. This letter and its attachment highlight the issues in the HEA reauthorization that are of particular importance to the Administration.

Interest rates

I am pleased that both the Senate and House versions would lower the interest rates that students pay on new loans by .8 of a percent, as the Administration proposed. This reduction is a major accomplishment that will provide substantial savings for students. I am concerned, however, that many current borrowers are struggling with excessive debt, and need to have access to the lower interest rates as well. The final version of H.R. 6 should reduce the interest rate on FFEL Consolidation Loans so that it is the same as the rate applicable to Direct and FFEL student loans and Direct Consolidation Loans. This policy is consistent with our HEA reauthorization proposal to have the same low consolidation rates in both loan programs.

In order to provide the low consolidation rate for students in the FFEL program, it may be necessary to maintain current subsidies or adjust the offset fee to ensure that loans continue to be sufficiently profitable. At the same time, however, subsidies that both the House and Senate versions of the bill would provide to lenders in the Stafford and PLUS loan programs are too high, and I urge you to reduce or eliminate them.

Section 458

I remain adamantly opposed to any cuts in the student aid administrative funds available to the Department under section 458 of the HEA beyond those agreed to in last year's balanced budget package. Both the House and Senate versions include such further decreases, and the House version would decrease section 458 funds even more substantially than the Senate version. Decreases in section 458 funds would threaten activities such as student aid application processing, student loan default collection, and the urgently needed modernization of student aid delivery systems.

Both the Senate and House versions would create a new loan processing and issuance fee to be paid to guaranty agencies from section 458 funds. I strongly support the Senate's provision to cap this fee to better ensure sufficient funding for the efficient administration of the loan programs. However, the Senate's decision to offset the amendment regarding need analysis determinations for veterans receiving G.I. Bill benefits with funds from section 458 undermines the Department's ability to manage the loan programs. I hope to work with you to find a more suitable offset for this provision.

National Board for Professional Teaching Standards

While I understand that the language in the House version of H.R. 6 on the National Board for Professional Teaching Standards will be satisfactorily resolved, I want to reiterate my opposition to this language, which would prohibit Federal funds from being made available to the National Board for Professional Teaching Standards. By defining standards of excellence for experienced teachers, the National Board helps to focus and upgrade teacher training, recognize and reward outstanding teachers, and keep our best teachers in the classroom, where they are needed most. As both the House and the Senate have recognized in the teacher recruitment and preparation provisions of their respective versions of H.R. 6, attracting and keeping well-trained teachers in the classroom is a national priority and an essential step to increase student achievement. More than half the States and a growing number of school districts offer incentives to teachers to seek Board certification, and have made Board certification an integral part of their overall efforts to strengthen teacher quality. By ending Federal support for the Board's research and development, the House provision jeopardizes completion of the remaining professional standards and assessments, and undermines these vital State and local efforts. This is the wrong step to take at precisely the time when we must do everything possible to set the highest standards for our teachers.

High Hopes

I am very pleased that both versions address the importance of early outreach to at-risk youth. The House version includes the Administration's proposal for High Hopes for College, while the Senate created a new "Connections" program that incorporates certain elements of High Hopes and the National Early Intervention Scholarship and Partnership (NEISP) program. I look forward to working with the conferees to ensure that the final version of the program encourages colleges to partner with high-poverty middle schools, offers comprehensive services to all students at these middle schools, and is administratively feasible.

Teacher training and recruitment

Both the House and Senate versions would authorize grants to States and local partnerships to reform and improve teacher training. The Senate version, which would divide funding equally between States and partnerships and would focus the partnerships on improving teacher education, offers a better chance at meaningful change than the House version, which limits partnerships' share of funding to 33 percent. Partnerships that involve colleges, teacher training programs, K-12 schools, and other entities will encourage more interaction among practicing teachers, aspiring teachers, and professors of education to better prepare teachers for 21^st century classrooms than will State-level efforts.

I am pleased that the Senate version includes the Administration's program to recruit new teachers for underserved areas through partnerships between colleges and underserved school districts. The House version fails to include sufficient efforts to recruit new teachers in order to address the pressing need for teachers in disadvantaged urban and rural areas. I urge the conferees to adopt the Senate's program for teacher recruitment.

Both versions include accountability provisions that require State and institutional "Report Cards" on the quality of teacher education. While I endorse reporting requirements that will provide more information about the teacher training process, I am concerned about eliminating students from student aid eligibility for some programs based on the inadequate performance of others.

Distance learning

We have made significant progress on the issue of distance learning, and I am pleased that both the House and Senate versions include demonstration programs to accommodate the new technologies and innovations that can greatly increase access to postsecondary education. The House provisions, which would allow the Secretary to waive any need analysis or general provisions for a representative sample of institutions (or consortia of institutions), would provide more flexibility and opportunity than the Senate provisions. The Senate version would authorize the waiver only of particular statutory provisions and any need analysis or general provisions regulations for 15 institutions or consortia initially, to be expanded to up to 50 in the third year of the program. I urge the conferees to provide sufficient flexibility in the demonstration projects to allow for the development and support of high-quality distance education programs, as contained in the House version.

I am also pleased that the Senate version authorizes the Administration's Learning Anytime Anywhere Partnership (LAAP) program, which would encourage partnerships to develop innovative ways of delivering education, ensuring quality, and measuring student achievement that are appropriate to distance education. I urge the conferees to adopt LAAP.

PBO

I am glad that provisions that would create a Performance Based Organization (PBO) for the administration of the student aid programs were included in both passed versions of H.R. 6. I prefer the PBO provisions in the Senate version, in part because these provisions explicitly provide for personnel and procurement flexibilities necessary for the successful operation of the PBO. I also ask that the conferees provide the PBO with buyout authority, comparable to that which the Congress previously provided to non-Defense agencies, to assist in transforming the organization to the new PBO structure.

Year 2000

It is anticipated that all of the Department's and its contractors' systems needed to deliver Federal student aid will be fully compliant with Year 2000 requirements no later than March 1999. However, the Department is still concerned that others, particularly institutions of higher education, may not be able to ensure that all their data systems related to the delivery of aid are also compliant. In light of that concern, it is important that the final version of the bill authorize the Secretary to delay implementation of those provisions with significant systems implications if earlier implementation would jeopardize the ability of institutions, lenders, or guaranty agencies to ensure that their data systems are Year 2000 compliant. In utilizing such discretion, the Department would work in close consultation with the Office of Management and Budget and the House and Senate authorizing committees.

Program integrity

There are numerous House and Senate provisions pertaining to program integrity that, taken together, the Administration would regard as a serious weakening of current program integrity protections. These provisions include changes regarding program review criteria, financial responsibility, the anti-injunction provision and the "85-15" rule. Our concerns with these provisions are described in more detail in the attachment.

TANF

The Senate version contains a provision amending the Temporary Assistance for Needy Families program (TANF). It would expand the type and length of education programs that may be counted toward a State's "work activity" participation rate. The provision would also extend the FY98 and FY99 exclusion of teen parents from the cap on education programs that may be counted toward a State's "work activity" participation rate to FY2000 and beyond. The Administration strongly supports the goals of enabling more welfare recipients to move from welfare to work and providing educational opportunities for those who do. We look forward to working with conferees to ensure that the final legislation keeps the doors of college open to all Americans while still maintaining the welfare law's strong work requirements.

Pay-As-You-Go Scoring

The Omnibus Budget Reconciliation Act of 1990 requires that all revenue and direct spending legislation meet a pay-as-you-go requirement. That is, no such bill should result in an increase in net budget costs, and, if it does, it could trigger a sequester if not fully offset. Statements of Administration Policy on the two versions of the bill as reported out of committee indicated that each version had significant net costs. As indicated above, the Administration is working to develop mutually agreeable language that would eliminate the risk of a sequester. The Administration will estimate the costs and savings in the conference bill as reported at the appropriate time.

The Office of Management and Budget advises that there is no objection to the submission of this report to the Congress.

Attachment

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