Section E. Postsecondary Education

• Overview
• Student Aid Summary Tables
• Student Aid Overview
• Pell Grants
• Campus-Based Programs
• Supplemental Educational Opportunity Grants
• Work-Study
• Perkins Loans
• Leveraging Educational Assistance Partnerships
• Direct Loans and Federal Family Education Loans
• Basic Loan Program Components
• Lender Interest Subsidy
• The 2001 Request
• Proposals Affecting Lenders
• Proposals Affecting Guaranty Agencies
• Student Aid Program Management
• Higher Education Tax Benefits
• Higher Education Programs Overview
• Federal TRIO Programs
• Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR UP)
• Title III: Aid for Institutional Development
• Dual Degree for Minority-Serving Institutions
• Developing Hispanic-serving Institutions
• Teacher Quality Enhancement Grants
• Preparing Tomorrow?s Teachers to Use Technology
• Fund for the Improvement of Postsecondary Education (FIPSE)
• Scholarships and Fellowships
• International Education and Foreign Language Studies
• Institute for International Public Policy
• Demonstration Projects to Ensure Quality Higher Education for Students with Disabilities
• Child Care Access Means Parents in School
• Learning Anytime Anywhere Partnerships
• Underground Railroad Program
• GPRA Data/HEA Program Evaluation
• Academic Facilities
• Howard University

E. POSTSECONDARY EDUCATION

Overview

The 2001 budget reflects President Clinton?s steadfast support for higher education and continues his commitment to ensure equal access to a quality postsecondary education for all Americans. The request includes significant increases in student financial assistance, especially in grant aid and work-study funding, as well as in outreach and support services such as provided by the TRIO programs. The budget also provides substantial increases for distance learning, key programs that support minority-serving institutions, and an innovative new program that would promote dual degrees for students attending certain Title III and Title V institutions.

Following are the highlights of the Administration?s 2001 budget:

• Total student financial aid available would expand to $54.2 billion, a 5.5 percent increase over the 2000 level. The total number of recipients of grant, loan, and work-study assistance would grow by 217,000 to more than 8.6 million students.
• The Pell Grant maximum award would increase by $200 to $3,500, the highest ever, to improve access to postsecondary education for students from the neediest families. Nearly 3.9 million students would receive Pell grants.
• A new College Opportunity Tax Cut would build on the Lifetime Learning Tax Credit by giving up to 5 million families the option of either taking a tax deduction or claiming a 28 percent tax credit on up to $5,000 in postsecondary tuition and fees. The annual limit on educational expenses would rise to $10,000 in 2003, providing up to $2,800 in tax relief to help American families pay for college.
• A $125 million or 62.5 percent increase for GEAR UP would help raise the educational expectations of approximately 1.4 million low-income elementary and secondary school students and give them the skills and encouragement they need to enter and succeed in college.
• A new $40 million Dual Degree Programs for Minority-Serving Institutions would help students at Hispanic-Serving Institutions, Historically Black Colleges and Universities, and Tribally Controlled Colleges and Universities to earn dual degrees in five years. Participants would earn one degree from their home institution, and the other from a partner institution. Funds would help establish consortia, provide scholarships to students, and compensate the minority-serving institutions for tuition revenue losses.
• A $20 million increase for Developing Hispanic-Serving Institutions would expand and enhance support to postsecondary education institutions that serve large percentages of Hispanic students. This program is part of the Department?s overall Hispanic Education Action Plan to increase academic achievement, high school graduation, post-secondary participation, and life-long learning of Hispanic Americans.
• An $80 million increase for TRIO would support a new $35 million College Completion Challenge Grants initiative aimed at reducing the high dropout rate among disadvantaged and minority college students. The new program would support a comprehensive approach to increasing minority retention and completion rates through such activities as pre-freshman summer programs, support services, and increased grant aid to students. Other new TRIO funds would support efforts to improve the effectiveness of the Student Support Services and Upward Bound programs.
• Preparing Tomorrow?s Teachers to Use Technology would double to $150 million to support the development and implementation of teacher training programs that prepare prospective teachers to use technology to improve instructional practices and enhance student learning in the classroom.
• A $60 million increase for Supplemental Educational Opportunity Grants would provide a total of $875 million in grant assistance to an estimated 1.2 million undergraduate students, or 64,000 more than in 2000.
• A $77 million increase for Work-Study would continue the President?s commitment to give 1 million students the opportunity to work their way through college and would bolster the President?s "America Reads" and "America Counts" initiatives, under which Work-Study recipients serve as reading and math tutors.
• Tripling funding to $15 million for the Childcare Access Means Parents in School program would allow the Department to award 150 additional awards while maintaining support to 87 existing institutions. These awards would increase access to postsecondary education for low-income students who are parents.
• A $36 million increase for the Aid for Institutional Development (Title III) programs would bolster the Administration?s long-term commitment to assisting institutions that enroll a large proportion of minority and disadvantaged students by providing funds to improve academic programs and administrative and fundraising capabilities at these institutions.
• Perkins Cancellations funding would double to $60 million in 2001 to address the growing number of cancellation entitlements resulting from expanded eligibility provisions in the Higher Education Amendments of 1992 and 1998.

Student Aid Summary Tables

The following tables show estimated Federal student aid funding, aid available, and recipients under the Department of Education 2001 budget.

Budget Authority ($ in millions)	1999	2000	2001 Request
Pell Grants	$7,704	$7,640	$8,356
Federal Family Education Loans1	3,380	4,555	2,808
Federal Direct Loans2	618	735	770
Work-Study	870	934	1,011
Supplemental Grants	619	6313	691
Perkins Loans	130	130	160
Leveraging Educational Assistance Partnerships	25	404	404
Total	13,345	14,665	13,836

⁴ Includes $10 million in fiscal year 2000 and 2001 for Special LEAP, pursuant to HEA section 415A(b)(2).

Aid Available to Students ($ in millions)1	1999	2000	2001 Request
Pell Grants	$7,326	$7,940	$8,469
Federal Family Education Loans	20,107	20,959	22,157
Federal Direct Loans	9,953	10,605	11,211
Consolidation Loans2	12,726	8,831	9,148
Campus-based Programs:
Work-Study	1,044	1,123	1,216
Supplemental Grants	784	799	875
Perkins Loans	1,058	1,058	1,058
Subtotal, Campus-based programs	2,886	2,980	3,149
Leveraging Educational Assistance     Partnerships3	50	90	90
Total	53,048	51,405	54,224

³ Reflects only the LEAP program's statutory dollar-for-dollar State matching requirement for BA up to $30 million and the two-to-one State matching requirement under Special LEAP for BA in excess of $30 million. Discretionary State contributions above the required match, which are not reflected, significantly increase the number of grant recipients, the amount of available aid, and the average award.

Number of Student Aid Awards (in thousands)	1999	2000	2001 Request
Pell Grants	3,810	3,849	3,885
Federal Family Education Loans	5,354	5,667	5,899
Federal Direct Loans	2,891	2,872	2,990
Consolidation Loans	678	468	481
Campus-based programs:
Work-Study	930	1,000	1,000
Supplemental Grants	1,118	1,139	1,203
Perkins Loans	698	698	676
Subtotal, Campus-based programs	2,746	2,837	2,879
Leveraging Educational Assistance     Partnerships1	83	120	120
Total awards	15,562	15,813	16,254

Number of Students Aided by Department Programs

	1999	2000	2001 Request
Unduplicated count	8,162	8,406	8,623

Student Aid Overview

Since 1993, the Administration has worked to expand postsecondary education opportunities for qualified students of all ages. By championing education as the Nation?s number one priority, the Administration has garnered unparalleled support for the Nation?s postsecondary students through significant increases in the core student aid programs, more affordable student loans, and higher education tax credits and education IRAs. For example, the Hope Scholarship tax credit is helping to make 2 years of college as universal as high school.

The Administration?s 2001 proposals for postsecondary education build upon the successes of the Balanced Budget Act of 1997 and the Higher Education Amendments of 1998 and support major Departmental objectives of ensuring postsecondary education access and completion while maintaining efficiently run, cost-effective delivery systems.

As reflected in the chart above, total student aid available expanded dramatically under the Clinton Administration, more than doubling from approximately $25 billion in 1993 to over $60 billion in 2001, including the HOPE Scholarship and Lifetime Learning tax credits. Much of this growth is attributable to student loan borrowing at four-year institutions, accounting for over 80 percent of all borrowing in the student loan programs.

Overall, the 2001 request demonstrates the President?s commitment to postsecondary education by providing $54.2 billion in grant, loan and work-study assistance to over 8.6 million students, an increase of some 217,000 over 2000. In addition, the Administration is proposing a College Opportunity Tax Cut which builds upon the Lifetime Learning tax credit and would expand tax relief for millions of families struggling to pay for college. When fully phased in, the President?s proposal would give families the option to claim a tax deduction or a tax credit worth up to $2,800 for any postsecondary education including college, graduate study, or training courses. This significant investment would help ensure that the doors of college remain open to all Americans in the 21^st Century.

Pell Grants

	1999	2000	2001 Request
BA in millions	$7,704	$7,640	$8,356
Program costs ($ in millions)	7,345	7,959	8,488
Aid available ($ in millions)	7,326	7,940	8,469
Recipients (in thousands)	3,810	3,849	3,885
Maximum grant	$3,125	$3,300	$3,500
Average grant	$1,923	$2,063	$2,180

The Pell Grant program helps ensure financial access to postsecondary education by providing grant aid to low- and middle-income undergraduate students. The most need-focused of the Department's student aid programs, Pell Grant awards vary in proportion to the financial circumstances of students and their families.

The Administration is proposing to increase the Pell Grant maximum award to $3,500 in 2001, up from $3,300 in 2000. This $200 increase would expand access to postsecondary education for an estimated 3.9 million disadvantaged students.

The 2001 request includes the use of $132 million from the cumulative prior-year surplus resulting from appropriations that exceeded the amount needed to finance the Pell Grant program.

Campus-Based Programs

The Supplemental Educational Opportunity Grant, Work-Study, and Perkins Loan programs are collectively referred to as the "campus-based" programs because participating institutions are provided with funding that they are responsible for administering on their own campuses. These programs allow financial aid administrators considerable flexibility in the packaging of financial aid awards to best meet the needs of their students.

Supplemental Educational Opportunity Grants

	1999	2000	2001 Request
BA in millions	$619	$6311	$691
Aid available (in millions)	784	799	875
Recipients (in thousands)	1,118	1,139	1,203
Average award	$701	$701	$727

The Supplemental Educational Opportunity Grant (SEOG) program provides grant assistance of up to $4,000 per academic year to undergraduate students with demonstrated financial need. The $691 million request is an increase of $60 million or 9.5 percent over the 2000 level. Along with institutional matching funds, the request would provide approximately $875 million in grant aid to more than 1.2 million financially needy students, an increase of some 64,000 students.

SEOG funds are allocated to institutions on the basis of a statutory formula, and a 25 percent institutional match is required. Awards are determined at the discretion of institutional financial aid administrators, although schools are required to give priority to Pell Grant recipients and students with the lowest expected family contributions.

Work-Study

	1999	2000	2001 Request
BA in millions	$870	$934	$1,011
Aid available ($ in millions)	1,044	1,123	1,216
Recipients (in thousands)	930	1,000	1,000
Average award	$1,123	$1,123	$1,215

The 2001 proposal for Work-Study is $1.0 billion, an increase of $77 million or 8.2 percent over the 2000 level, to sustain the President?s commitment to give 1 million students the opportunity to work their way through college.

The Work-Study program provides grants to participating institutions to pay up to 75 percent of the wages of needy undergraduate and graduate students working part-time to help pay their college costs. The school or other eligible employer provides the remaining 25 percent of the student?s wages. Funds are allocated to institutions on the basis of a statutory formula, and individual award amounts to students are determined at the discretion of institutional financial aid administrators.

Institutions must use at least 7 percent of their Work-Study allocations to support students working in community service jobs. The Administration has strongly encouraged institutions to use Work-Study funds to promote community service activities, particularly in the areas of tutoring children in mathematics and reading and serving in family literacy programs. An institution?s community service activities must include at least one reading tutor or family literacy project.

Through the America Reads Challenge, tens of thousands of Work-Study students at more than 1,300 colleges and universities are earning money for college while helping others learn to read. The Department waives the 25 percent employer-matching requirement for students who work as reading tutors in literacy programs that provide services to preschool age children, children in elementary school, and their families.

To promote improvement in the math skills of American children, the President extended the America Counts Challenge to colleges and universities, which is aimed at helping all students master challenging mathematics, including the foundations of algebra and geometry, by the end of the 8^th grade. The Department waives the 25 percent employer-matching requirement for Work-Study students employed as math tutors to enable college students with an affinity for mathematics and science to gain valuable work experience as tutors while taking an active role in helping students master advanced skills in mathematics. Since July 1999, almost 400 institutions have signed on.

Perkins Loans (BA in millions)

	1999	2000	2001 Request
Federal Capital Contributions	$100	$100	$100
Loan Cancellation Payments	30	30	60
Loan volume ($ in millions)	1,058	1,058	1,058
Number of borrowers (in thousands)	698	698	676
Average loan	$1,516	$1,516	$1,565

The request includes level funding for Perkins Federal Capital Contributions. As in past years, most funding for new loans will come from the repayment of outstanding loans to the program's institutional revolving funds. These repayments are expected to total $959 million in 2001 before subtracting administrative expenses.

The Perkins Loan program provides long-term, low-interest loans to undergraduate and graduate students with demonstrated financial need at 2,000 institutions. Total assets of $7.2 billion represent nearly 40 years of Federal capital contributions, institutional matching funds, repayments on previous loans, and reimbursements for cancellations.

Perkins Loan borrowers pay no interest during in-school, grace, and deferment periods, and are currently charged 5 percent interest during the principal repayment period. Annual borrowing limits are $4,000 for undergraduate students and $6,000 for graduate and professional students.

The request would double funding for Perkins Loan Cancellations. This program reimburses institutional revolving funds for borrowers whose loan repayments are canceled in exchange for undertaking certain public service employment, such as teaching in Head Start programs, full-time law enforcement, or nursing. Cancellations have increased significantly in recent years due to the expansion of eligibility by the Higher Education Amendments of 1992 and 1998.

Leveraging Educational Assistance Partnerships

	1999	2000	2001 Request
BA in millions	$25.0	$40.0	$40.0
Aid available in millions1	50.0	90.0	90.0
Maximum grant	$5,000	$5,000	$5,000
Recipients (in thousands)	83	120	120
Average Grant	$600	$750	$750

The Leveraging Educational Assistance Partnership (LEAP) program provides Federal matching funds to encourage States to retain and expand need-based State grant programs, and to establish community service programs to help financially needy students pay for college. Appropriations in excess of $30 million are reserved for a separate program, Special LEAP, which requires a two-to-one match (rather than the dollar-for-dollar requirement of the regular program) and supports a variety of allowable activities including expanded LEAP awards, scholarships, and early intervention programs.

Direct Loans and Federal Family Education Loans

	1999	2000	2001 Request
DIRECT LOANS
New Loan Subsidy (BA)1	0	0	0
New Loan Subsidy (Program Costs)2	-$378.2	-$1,312.8	-$516.2
Re-estimate of Prior Loans 3	-$360.9	-$2,442.3	--
Federal Administration 4	617.6	735.0	770.0
Total, New Budget Authority	617.6	735.0	770.0
Total, Program Costs	-121.5	-3,020.0	253.8
FEDERAL FAMILY EDUCATION LOANS
New Loan Subsidies (BA)	$3,485.4	$3,731.2	$2,760.3
Re-estimate of Prior Loans3	-153.1	776.0	--
Federal Administration	47.3	48.0	48.0
Total, FFEL Program BA	3,379.5	4,555.2	2,808.3
FFEL LIQUIDATING ACCOUNT
New Budget Authority 5	0	0	0
Program Costs	-550.0	-691.2	-599.9
Total, Student Loans (BA)	3,997.1	5,290.2	3,578.3
Total, Student Loans (Prog. Cost)	2,708.0	843.9	2,462.2

⁵ This account reflects costs associated with loans made prior to 1992. In fiscal years 1999, 2000, and 2001, collections will exceed default and in-school interest costs. Therefore, program costs are negative.

NEW LOAN VOLUME	1999	2000	2001 Request
Direct Loans	9,953	10,605	11,211
Federal Family Education Loans	20,107	20,959	22,157
Direct Consolidation Loans	8,006	4,250	4,403
FFEL Consolidation Loans	4,720	4,581	4,745
Total	42,786	40,395	42,516

NUMBER OF LOANS (in thousands)	1999	2000	2001 Request
Direct Loans	2,891	2,872	2,990
Federal Family Education Loans	5,354	5,667	5,899
Direct Consolidation Loans	412	207	213
FFEL Consolidation Loans	266	261	268
Total	8,923	9,007	9,370

The Department of Education operates two major student loan programs: the Federal Family Education Loan (FFEL) program and the William D. Ford Federal Direct Loan (Direct Loan) program. The Administration is committed to supporting two strong student loan delivery systems, allowing individual institutions to choose which best meets their needs and the needs of their students.

The FFEL program makes loan capital available to students and their families through some 4,100 participating private lenders. There are 36 active State and private nonprofit guaranty agencies which administer the Federal guarantee protecting FFEL lenders against losses related to borrower default. These agencies also collect on defaulted loans and provide other services to lenders. The FFEL program accounts for about two-thirds of student loan volume.

In order to reduce complexity, improve efficiency for both borrowers and schools, expand borrower repayment options, and lower taxpayer costs, the Student Loan Reform Act (SLRA) of 1993 established a simpler Direct Loan program. Under this program, the Federal Government uses Treasury funds to provide loan capital directly to schools, which then disburse loan funds to students—greatly streamlining loan delivery for students, parents, and schools. Direct Loans also offers income-contingent repayment, which permits borrowers to start with small monthly payments and increase the size of their payments as their income grows.

The Direct Loan program began operation in academic year 1994-95 and now accounts for about one third of student loan volume, a level it is projected to sustain over the next few years. By the end of the fifth year of operation (1998-99) approximately 1,260 schools—representing about one-fourth of all schools in the Department?s student loan programs—were actively participating in the Direct Loan program.

Basic Loan Program Components

Both FFEL and Direct Loans feature four types of loans with similar fees and maximum borrowing amounts:

• Stafford Loans are subsidized, low-interest loans based on financial need. The Federal Government pays the interest while the student is in school and during certain grace and deferment periods. The interest rate varies annually and is capped at 8.25 percent. For July 1, 1999 through June 30, 2000, the rate for borrowers in repayment has been set at 6.92 percent.
• Unsubsidized Stafford Loans are offered at the same low rates as subsidized Stafford Loans, but the Federal Government does not pay interest for the student during in-school, grace, and deferment periods.
• PLUS Loans are available to parents of dependent undergraduate students at slightly higher rates than Stafford or Unsubsidized Stafford Loans, and the Federal Government does not pay interest during in-school, grace, and deferment periods. The interest rate varies annually and is capped at 9 percent. The 1999-2000 rate is 7.72 percent.
• Consolidation Loans allow borrowers with multiple student loans who meet certain criteria to combine their obligations and extend their repayment schedules. The rate for both FFEL and Direct Consolidation Loans is based on the weighted average of loans consolidated rounded up to the nearest 1/8^th of a percent.

Lender Interest Subsidy

An HEA provision changing the lender special allowance interest rate index from the 91-day Treasury bill to the 3-month commercial paper rate was recently inserted as an amendment to the Ticket to Work and Work Incentives Improvement Act of 1999. For new loans disbursed on or after January 1, 2000 through June 30, 2003, FFEL lenders will be paid interest based on a 3-month commercial paper rate plus 2.34 percent for Stafford loans in repayment. This provision was sought by the lending industry to facilitate borrowing in the private sector.

The 2001 Request

The Administration proposes a number of reforms to the FFEL program designed to ensure equitable financial returns among lenders, improve default recovery efficiency by cutting costs, and return excess Federal funds held by guaranty agencies to the Federal Treasury. The 2001 budget includes a combination of student loan proposals that would save an estimated $2.3 billion in outlays in 2001 and $3.8 billion over five years. If these proposals are enacted, the savings would be available as an offset to fund discretionary activities.

Proposals Affecting Lenders

The change to the 3-month commercial paper rate increases lender yields in two ways: (1) under current economic forecasts, lender yields will be an estimated 11 basis points higher than under the prior T-bill-based formula; and (2) the elimination of the need to hedge—insure against future interest rate changes—will reduce lender costs by about 20 basis points. In order to reestablish the cost-neutrality of the commercial paper rate change, the Administration proposes to:

• Reduce lender interest subsidies by 11 basis points, saving some $83 million in 2001 and $326 million over 5 years.
• Lower lender subsidies by another 20 basis points to save $152 million in 2001 and almost $600 million over 5 years.

In effect, the 31 basis point reduction in the proposed lender special allowance formula (during repayment periods) would change the current "3-month commercial paper plus 2.34 percent" to "3-month commercial paper plus 2.03 percent."

In addition, the Administration proposes to:

• Eliminate interest subsidies on certain loans funded through tax-exempt securities. This change would save an estimated $94 million in 2001 and nearly $800 million over 5 years.

Lenders with access to tax-exempt financing have a lower cost of funds than competitors that do not have access to tax-exempt funds and thus do not require the same special allowance subsidies provided to other lenders. To correct this inequitable advantage, the Administration proposes to remove the Federal special allowance subsidy on loans made with tax-exempt financing that are eligible for a 9 ? percent interest rate floor.

Proposals Affecting Guaranty Agencies

In order to maximize default collections and bring greater uniformity to the collections process, the Administration proposes to:

• reduce the percentage that guaranty agencies currently may retain from 24 percent to 18.5 percent—in line with what the Department pays on average to its private collection contractors. This change would save $236 million in 2001 and $352 million over 5 years.
• Reduce guaranty agency retention to 12 percent on defaulted loans that are converted to Consolidation Loans, in recognition of the lower cost associated with such collections. This proposal would generate $412 million in savings for 2001 and an estimated $657 million over 5 years.

The Higher Education Amendments of 1998 expanded availability of voluntary flexible agreements to all guaranty agencies beginning in 2001. The greater regulatory flexibility afforded under these agreements is reducing the need for guaranty agencies to hold Federal funds in reserve. In recognition of this fact, the Administration proposes the following measures to save a total of $1.3 billion in 2001:

• Accelerate into 2001 the recall of $194 million in Federal reserve funds already due to be returned to the Treasury in 2002 based on the Balanced Budget Act of 1997.
• Accelerate into 2001 another $165 million due to be recalled in 2006 and 2007 under the Higher Education Amendments of 1998.
• Recover excess Federal Fund reserves of $950 million in 2001.

Student Aid Program Management

The Department would spend $900 million in 2001 to administer the Federal postsecondary education programs and pay account maintenance fees to FFEL guaranty agencies, an increase of $37 million over the 2000 level. Of these funds, $730 million would support Department administrative activities, primarily for the student financial assistance programs, and $170 million would be paid to guaranty agencies. These funds, which make up more than 65 percent of the Department?s overall administrative budget, are drawn from four sources: mandatory funding authorized under Section 458 of the Higher Education Act (85.5 percent of total funds available), the discretionary Program Administration account (9.1 percent), a discretionary appropriation covering a portion of administrative costs for the FFEL program (5.3 percent), and discretionary appropriations for the administration of the College Housing and Academic Facilities and HBCU Capital Financing programs (0.1 percent). For more details, see Section G on Departmental Management.

In recognition of the importance of these management responsibilities, in 1998 Congress and the Department established the Office of Student Financial Assistance (OSFA) as the Federal government's first performance-based organization. Under Chief Operating Officer Greg Woods, OSFA has developed a five-year performance plan with three principal goals: to improve customer satisfaction, reduce costs, and improve employee satisfaction. OSFA has also developed, and is in the initial stages of implementing, a comprehensive modernization blueprint to create an integrated, streamlined system that delivers student aid more quickly and efficiently and eliminates costly, outmoded paper processes.

The Office of Postsecondary Education (OPE) maintains primary responsibility for helping develop student aid and higher education policy, drafting regulations and conducting negotiated rulemaking, while at the same time providing national leadership and fostering strategic innovations to ensure access to postsecondary education, promote high standards and achievement for all postsecondary students, and expand linkages with other areas of national interest.

Higher Education Tax Benefits

The President?s College Opportunity Tax Cut will make college more affordable for millions of American Families.

The Administration is proposing $30 billion in tax relief over 10 years for millions of families struggling to pay for college. The College Opportunity Tax Cut builds on the Lifetime Learning tax credit that the President signed into law as part of the historic Balanced Budget Act of 1997. Under the new proposal, families could choose between taking a tax deduction or claiming a 28 percent tax credit for tuition and fees to pay for postsecondary education.

The proposal would cover up to $5,000 of educational expenses in 2001 and 2002 and up to $10,000 in 2003 and beyond. When fully phased in, the President?s proposal would give families up to $2,800 in tax relief annually for college, graduate school or job training. The tax cut would phase out at incomes between $50,000 and $60,000 for individuals (up from $40,000- $50,000); and between $100,000 and $120,000 for joint filers (up from $80,000-$100,000) under the current Lifetime Learning tax credit.

In addition, students in the first two years of college or vocational school can still receive a 100% tax credit for the first $1,000 of tuition and required fees and a 50% credit on the second $1,000 under the HOPE Scholarship. This credit is available for tuition and required fees less grants, scholarships, and other tax-free educational assistance.

Families also are now permitted to withdraw funds from their Individual Retirement Accounts without penalty and use the earnings tax-free to pay postsecondary education costs.

Other proposed tax benefits include the following:

Elimination of 60-month limit on student loan interest deduction. Taxpayers currently may take an "above the line" deduction (the taxpayer does not need to itemize in order to benefit) for interest paid in the first 60 months of repayment on private or Government-backed loans for postsecondary education. The maximum deduction is $1,500 in 1999, $2,000 in 2000, and $2,500 in 2001 and beyond. Eligibility for this deduction is phased out at incomes between $60,000 and $75,000 for joint filers and between $40,000 and $55,000 for single filers. The Administration is proposing to eliminate the 60-month limit beginning January 1, 2000.

Reinstate exclusion of employer-provided education benefits for graduate education. Subsection (d) of Section 127 of the Tax Code, which allows workers to exclude from their taxable income up to $5,250 of employer-provided education benefits for undergraduate courses, was extended through December 31, 2001 by a provision in the Ticket to Work and Work Incentives Improvement Act of 1999. The Administration is proposing to reinstate the exclusion for graduate education as well, for coursework beginning after June 30, 2000 and ending before January 1, 2002.

Higher Education Programs Overview

Despite the availability of significant need-based student financial aid, minority, low-income and other disadvantaged students continue to lag behind their more affluent peers in enrolling in and graduating from postsecondary education institutions. To overcome this divide, the Administration?s budget provides substantial funding for programs that help minority and other disadvantaged students prepare for and succeed in college. The Administration?s budget also supports programs for teacher training and preparation.

The 2001 request would increase funding for GEAR UP by $125 million to provide comprehensive mentoring, tutoring, counseling, and other services for low-income elementary and secondary school students who must overcome many barriers to obtain a postsecondary education. The Federal TRIO Programs would receive an $80 million increase to strengthen outreach and support services in order to improve the participation and completion rates of disadvantaged students in college and doctoral studies. This includes $35 million to support a College Completion Challenge Grants initiative that would provide scholarship assistance and intensive summer programs for students in their first and second year of college, as well as funds to respond to evaluation findings in Student Support Services and Upward Bound. In addition, low-income parents would benefit from tripling the funding for the Child Care Access Means Parents in School program, which provides campus-based childcare services.

The budget also provides a $36 million increase in the Aid for Institutional Development programs to support institutions that serve minority and disadvantaged students. This includes large increases for Historically Black Colleges and Universities, Historically Black Graduate Institutions, Tribally Controlled Colleges and Universities, and the Minority Science and Engineering Improvement Program. An additional $20 million for Developing Hispanic-serving Institutions programs would expand support for postsecondary education institutions that serve large percentages of Hispanic students. And a new $40 million Dual Degree Programs for Minority-Serving Institutions proposal would help students at these institutions earn two degrees in five years. Participating students could earn one degree from their home institution and one from a partner institution in a field in which the home institution does not offer a program and in which minorities are underrepresented.

Funding for Preparing Tomorrow?s Teachers to use Technology would double to $150 million to help public and private entities develop and implement teacher training programs that prepare prospective teachers to use technology for improved instructional practices and student learning in the classroom. In addition, funding for Learning Anytime Anywhere Partnerships would increase to $30 million to broaden support for projects that use technology, lift barriers to technology improvements, and expand choice of institutions and programs to citizens. Finally, the request includes a $3.3 million increase for the International Education Overseas Programs to expand opportunities for students to gain international expertise, first-hand exposure to cultures and languages of other countries, and training as language and area specialists.

Federal TRIO Programs (BA in millions)

	1999	2000	2001 Request
Student Support Services	$178.9	$182.5	$218.4
College Completion Challenge Grants	--	--	35.0
Upward Bound	220.5	239.9	249.0
Upward Bound Math/Science	29.3	30.2	30.8
Talent Search	98.4	100.4	102.4
Educational Opportunity Centers	29.8	30.4	31.0
McNair Postbaccalaureate Achievement	32.1	34.5	35.2
Staff Training	4.8	5.8	5.8
Dissemination Partnership Projects	1.9	7.0	7.0
Technology Supplements	--	10.0	5.9
Evaluation	1.5	1.5	1.5
Administration/Peer Review	2.8	2.8	3.0
Total	600.0	645.0	725.0

The Federal TRIO Programs fund critical postsecondary education outreach and student support services for disadvantaged individuals to help them enter and complete postsecondary education programs. The request would provide $36 million to strengthen the Student Support Services program by increasing the intensity of services and another $35 million for a new College Completion Challenge Grants initiative to provide scholarship assistance and intensive summer programs for students in their first or second year of college. The budget also includes support for improvements suggested by recent evaluations of the TRIO programs, such as providing work-study opportunities in the Upward Bound program. The request would continue support for a technology initiative to help bridge the digital divide and would maintain the current level of services in the remaining TRIO programs. The total number served by the TRIO programs would increase to more than 760,000 disadvantaged students.

Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR UP) (BA in millions)

	1999	2000	2001 Request
State Grants	$41.9	$66.7	$108.4
Partnership Grants	75.5	130.8	212.7
NEISP1	1.0	--	--
21st Century Scholar Certificates	0.2	0.2	0.6
Evaluation	0.9	1.5	1.8
Peer Review	0.5	0.8	1.5
Total	120.0	200.0	325.0

GEAR UP supports a combination of early college preparation and awareness activities—including mentoring, tutoring, academic and career counseling, and parental involvement—designed to raise the educational expectations of low-income elementary and secondary school students and give them the skills and encouragement they need to successfully pursue postsecondary education. The program also provides scholarship assistance to students when they reach college. GEAR UP provides grants to States and partnerships of low-income middle and high schools, institutions of higher education, and community organizations to target entire grades of students in the early grades and put them on a path to college. The 2001 request would provide funds for at least one State or partnership grant in every eligible State and Territory. It would leverage the resources of more than 2,400 community organizations and businesses as partners, and would provide services to some 1.4 million low-income students.

Title III: Aid for Institutional Development (BA in millions)

	1999	2000	2001 Request
Strengthening Institutions (Part A)	$60.3	$60.3	$63.0
Strengthening Historically Black Colleges     and Universities (Part B)	136.0	148.8	169.0
Strengthening Historically Black     Graduate Institutions (Part B)	30.0	31.0	40.0
Strengthening Tribally Controlled Colleges     And Universities (Part A)	3.0	6.0	9.0
Strengthening Alaska Native and Native     Hawaiian-serving Institutions (Part A)	3.0	5.0	5.0
Minority Science and Engineering     Improvement (Part E)	7.5	7.5	8.5
Total	$239.8	$258.5	$294.5

The 2001 request for Title III supports the Administration?s strong commitment to ensuring access to high quality postsecondary education for the Nation?s minority and disadvantaged students. A $36 million or 13.9 percent overall increase in Title III funding would help provide equal educational opportunity and strong academic programs for such students and help achieve greater financial stability for the institutions that serve these students.

Dual Degree for Minority-Serving Institutions

	1999	2000	2001 Request
BA in millions	--	--	$40.0

This newly proposed program would provide grants to minority-serving institutions and research universities to enable students at Hispanic-Serving Institutions, Historically Black Colleges and Universities, Tribally Controlled Colleges and Universities, and Alaska Native- and Native Hawaiian-serving institutions to earn dual degrees. Participants would spend three years as undergraduates earning a bachelor?s degree at their home institution and two years at a partner institution, such as a major research university, earning a bachelor?s or master?s degree in a field in which the student?s racial or ethnic group is underrepresented. Funds would (1) establish dual-degree program articulation agreements, (2) provide scholarships to students to bridge tuition and cost of attendance differences between the minority-serving institution and the partner institution; and (3) compensate the minority-serving institution for revenue losses associated with the participants? accelerated matriculation.

Developing Hispanic-serving Institutions

	1999	2000	2001 Request
BA in millions	$28.0	$42.3	$62.5

A $20.3 million increase would expand and enhance the academic quality, institutional management, fiscal stability and self-sufficiency of the colleges and universities that enroll large percentages of Hispanic students. This request demonstrates the Administration?s commitment—as part of its Hispanic Education Action Plan—to ensuring that Hispanic students have access to high quality postsecondary education and to closing the gaps between Hispanic and majority students with respect to academic achievement, high school graduation, postsecondary enrollment and life-long learning.

Teacher Quality Enhancement Grants (BA in millions)

	1999	2000	2001 Request
State Grants	$33.4	$43.7	$43.8
Partnership Grants	33.4	43.7	43.8
Recruitment Grants	9.6	9.7	9.7
Peer Review and Evaluation	0.8	0.9	0.7
Total	77.2	98.0	98.0

The Teacher Quality Enhancement Grants program helps improve the ways our nation recruits, prepares, licenses and supports teachers. The program has three components: a State grants program, a Partnership grants program, and a Recruitment grants program. The State Grants program is designed to help States improve the quality of their teaching force through better teacher licensing and certification, greater accountability for high quality teacher preparation and professional development, expansion of alternative pathways into teaching, and increased support for new teachers.

The Partnership Grants program strengthens the role of K-12 educators in designing and implementing effective teacher education programs by increasing collaboration among these practitioners and departments of arts and sciences and schools of education at institutions of higher education. The Recruitment Grants program supports efforts to reduce shortages of qualified teachers in high-need school districts through high-quality teacher preparation and induction programs tailored to meet these locally-identified needs. States or partnerships may apply to receive Recruitment Grants.

Preparing Tomorrow?s Teachers to Use Technology

	1999	2000	2001 Request
BA in millions	$75.0	$75.0	$150.0

Under the Administration?s ESEA reauthorization proposal, the current Teacher Training in Technology program would be reauthorized as Preparing Tomorrow?s Teachers to Use Technology. The new program would continue to help public and private entities develop and implement teacher training programs that prepare prospective teachers to use technology to improve instructional practices and enhance student learning in the classroom. The program would make competitive grants to consortia of States, colleges of education, school districts, and others to help ensure that all new teachers can teach effectively with technology. Currently, most colleges of education do not adequately prepare teachers to use educational technology; the emphasis is on computer literacy rather than the application of technology to the classroom. The request would support 175 new Capacity Building awards to stimulate State and local initiatives for campus-wide teaching reform, 120 new Implementation and Catalyst grants, and 167 Implementation and Catalyst continuation grants.

Fund for the Improvement of Postsecondary Education (FIPSE)

	1999	2000	2001 Request
BA in millions	$50.0	$74.2	$31.2

FIPSE supports exemplary, locally developed projects that are models for innovative reform and improvement in postsecondary education. The 2001 request would fund 240 new and continuing projects under the Comprehensive program. Applications making more productive use of resources to improve teaching and learning, and those disseminating innovative reforms that have already been developed and evaluated, would continue to be highlighted in workshops and receive invitational priority. In addition, funding would be targeted on the following areas: improving educational access, retention and completion; creating safe campus environments; reforming curriculum; providing high quality professional development; and enhancing student preparation through school-college partnerships. The request also would support new international student exchange efforts.

Scholarships and Fellowships (BA in millions)

	1999	2000	2001 Request
Byrd Honors Scholarships	$39.3	$39.9	$41.0
Javits Fellowships1,2	7.0	20.0	10.0
Graduate Assistance in Areas    of National Need (GAANN)	24.0	31.0	31.0

²The fiscal year 2000 appropriation provided $10 million for Javits Fellowships for academic year 2000-2001 and $10 million for academic year 2001-2002.

The Byrd Honors Scholarships program recognizes and rewards a high level of student achievement by providing merit-based awards to four cohorts of undergraduate college students each year. Increased funding for the program would maintain the Administration?s policy of building toward the program?s authorization level of $45 million, and it would provide awards for over 27,000 scholars, including 7,310 new scholars. Scholarships would remain at the authorized level of $1,500.

Javits Fellowships provide up to 4 years of support to students of superior ability who are pursuing doctoral degrees, or the highest terminal degree, in the arts, humanities, and social sciences. The 2000 appropriation provided $10 million for Javits Fellowships for academic year 2000-2001 and $10 million for academic year 2001-2002. The 2001 request would support 382 fellows for academic year 2002-2003.

GAANN provides fellowships, through grants to postsecondary institutions, to graduate students of superior ability and financial need studying in areas of national need. Participating graduate schools must ensure that they will seek talented students from traditionally under-represented backgrounds. The 2001 request would support 1,199 fellows.

International Education and Foreign Language Studies (BA in millions)

	1999	2000	2001 Request
Domestic programs	$60.0	$62.0	$62.0
Overseas programs	6.5	6.7	10.0
Total	66.5	68.7	72.0

The budget request provides continued support for Domestic programs and a substantial increase of $3.3 million or 50 percent for Overseas programs that strengthen the American education system in the area of foreign languages and international studies. These programs support comprehensive language and area study centers within the United States, research and curriculum development, and opportunities for American scholars to study abroad. In addition to promoting general understanding of the peoples of other countries, the Department?s international programs also serve important economic, diplomatic, defense, and other security interests of the United States. The request would fund approximately 437 grants to institutions of higher education and directly support 1,025 individuals through fellowships and projects.

Institute for International Public Policy

	1999	2000	2001 Request
BA in millions	$1.0	$1.0	$1.0

The 2001 request maintains support for the Institute?s efforts to encourage African-American and other underrepresented minorities to enter the Foreign Service of the United States and serve in private international voluntary organizations.

Demonstration Projects to Ensure Quality Higher Education for Students with Disabilities

	1999	2000	2001 Request
BA in millions	$5.0	$5.0	$5.0

This program funds model demonstration projects that provide technical assistance and professional development activities for faculty and administrators in institutions of higher education in order to improve the quality of education for students with disabilities. Funds would be used to continue support for 22 grants to develop innovative and effective teaching methods, synthesize research and information, and conduct faculty-training sessions.

Child Care Access Means Parents in School

	1999	2000	2001 Request
BA in millions	$5.0	$5.0	$15.0

This program supports the participation of low-income parents in the postsecondary education system by providing campus-based childcare services. Grants made to institutions of higher education are used to supplement childcare services or start a new program, not to supplant funds for current childcare services. Participating institutions are encouraged to leverage local or institutional resources and to employ a sliding fee scale for students who use the childcare facilities and services. The $15.0 million budget request would provide continued support to 87 institutions as well as new awards to an additional 150 institutions.

Learning Anytime Anywhere Partnerships

	1999	2000	2001 Request
BA in millions	$10.0	$23.3	$30.0

This program is intended to help postsecondary education institutions make the transition to a new generation of distance education that has been made possible by the explosive growth of the Internet and other new technologies. Instead of relying upon closed networks?such as broadcast satellites?to deliver courses on fixed schedules to students within limited geographic boundaries, postsecondary institutions now have the capacity to reach students regardless of where they are located, at any time of day. The program especially helps disabled individuals who face barriers in traditional education settings, dislocated workers who need to acquire new skills, individuals making the transition from welfare to work, and individuals interested in investing in their own futures by upgrading their academic or job skills who may be limited in their options because of family obligations or by other time and place constraints. The competition for the new funds would promote educational quality, resource sharing and coordination, and innovations in teaching and student support.

Underground Railroad Program

	1999	2000	2001 Request
BA in millions	$1.8	$1.8	$1.8

This program helps one or more non-profit educational organizations establish facilities to house, display, and interpret artifacts relating to the history of the Underground Railroad, and to make the interpretive efforts available to institutions of higher education. Funds are used to assist in the building of public-private partnerships and the creation of endowment funds to support ongoing museum operations.

GPRA Data/HEA Program Evaluation

	1999	2000	2001 Request
BA in millions	--	$3.0	$3.0

The request would help the Department obtain the data needed to comply with the Government Performance and Results Act and to carry out evaluations required by the Higher Education Act. In particular, the budget would support continued development of baselines and targets for performance indicators.

Academic Facilities (BA in millions)

	1999	2000	2001 Request
Interest Subsidy Grants	$13.0	$12.0	$10.0
CHAFL Federal Administration	0.7	0.7	0.7
HBCU Capital Financing Federal     Administration	.1	.2	.2

The academic facilities programs were created to provide financial assistance to institutions of higher education for the construction, reconstruction, or renovation of academic facilities. Funds for Interest Subsidy Grants and CHAFL are requested solely to manage and service the existing portfolios of facilities loans and grants that were made in prior years. The budget for HBCU Capital Financing Federal Administration pays for the management and service of existing and future loans.

Howard University (BA in millions)

	1999	2000	2001 Request
Howard University Hospital	$29.5	$30.3	$30.4
General Support	185.0	189.1	193.6
Total	214.5	219.4	224.0

The 2001 request would maintain support for Howard?s academic operations, research, endowment, construction, and the Hospital, while giving the University broad flexibility to allocate funds to best meet its needs. The request reflects the Administration's support for maintaining and improving the quality and financial strength of an institution that provides a major avenue of postsecondary access and opportunity for African Americans.

Direct any questions to Martha Jacobs, Budget Service

[Section D - Vocational and Adult Education]

[Section F - Educational Research and Improvement]