HELP Committee Passes HEA and Reconciliation Bills

On Wednesday, June 20, the Senate Health, Education, Labor and Pensions (HELP) Committee unanimously passed S. 1642, reauthorizing the Higher Education Act (HEA). As expected, following the various reports on scandals in the student lending industry, the HEA reauthorization focuses on student lending and college affordability by setting stricter regulations on relationships between schools and lenders, as well as increasing the maximum Pell grant awards and expanding grant assistance opportunities. The HELP Committee also passed a reconciliation bill, as directed by the joint budget resolution for fiscal year 2008 (FY08), by a vote of 17-3.

On Wednesday, June 20, the Senate Health, Education, Labor and Pensions (HELP) Committee unanimously passed S. 1642, reauthorizing the Higher Education Act (HEA). As expected, following the various reports on scandals in the student lending industry, the HEA reauthorization focuses on student lending and college affordability by setting stricter regulations on relationships between schools and lenders, as well as increasing the maximum Pell grant awards and expanding grant assistance opportunities. The HELP Committee also passed a reconciliation bill, as directed by the joint budget resolution for fiscal year 2008 (FY08), by a vote of 17-3.
The new HEA increases the amount of information that schools and lenders must provide students about their loans. The bill will also ban lenders from providing school financial aid officials with perks such as student aid assistance in order to be on schools’ “preferred lender” lists. The measure would shorten the form that students must complete for financial aid and would direct the U.S. Department of Education (ED) to track tuition increases and assess the drivers behind increasing college costs, putting schools on notice that the government is concerned about rapid tuition increases.
The 67-page reconciliation bill cuts federal subsidies to lending companies by as much as $19 billion. The bill will channel most of those savings to student aid and ease repayment rules for borrowers. It also creates a new entitlement funding stream for Pell grants that would not be subject to the annual appropriations process. It is intended to boost the maximum Pell grant by more than $1,000, to $5,400 by 2011. The bill would establish new "Promise Grants" for the neediest Pell recipients, cap student loan repayments at 15% of discretionary income and offer loan forgiveness for some public-service employees.
The three Senators to vote against the measure, Judd Gregg (R-NH), Richard Burr (R-NC), and Wayne Allard (R-CO), criticized the committee for using the budget reconciliation process to pass provisions that should have been placed in the HEA reauthorization. Reconciliation bills are not subject to filibuster in the Senate, thereby acting as a better vehicle for passing controversial pieces of legislation that are not likely to get minority support. However, the three dissenters on the committee seemed more opposed to the process through which the bill is being considered, and less concerned with the provisions within the bill itself, though they claim the bill will cost more in Pell increases then it will save in subsidy cuts.
The subsidy cuts largely track those proposed by President Bush in his 2008 budget and included in a House bill, H.R. 2669, approved by the Education and Labor Committee on June 13. The House bill, however, also includes provisions that would halve the interest rate on subsidized student loans over five years and boost the maximum Pell grant by $500. Once the two bills pass through their respective chambers, Congressional leaders expect a quick conference. As of this point, the House Education and Labor Committee has not scheduled its own HEA markup.
Resources:
Alex Wayne, “Committee Approves Pair of Bills Designed to Overhaul Financial Aid System,” CQ Today, June 20, 2007.
Stephen Langel, “Higher Education Act, Controversial Reconciliation Provision Head to Senate Floor,” Congress Now, June 20, 2007.
Doug Lederman, “Students’ Gain, Lender’s’ Pain,” Inside Higher Ed, June 21, 2007.
Amit R. Paley, “Student Loan Overhaul Advances,” Washington Post, June 21,2007.
Author: SAS