House to Take Up Measure to Boost Pell Grants, Alter Student Loan Rules (HR 609) | 04.18.06

Posted in Student Loan Links By Student Loan Network Staff

House to Take Up Measure to Boost Pell Grants, Alter Student Loan Rules
Source: Congressional Quarterly Today

The House is beginning debate on a bill that would authorize larger Pell grants for low-income college students, increase competition for consolidated student loans and endorse an “academic bill of rights” proposed by conservative activists.

The legislation (HR 609) — introduced by Majority Leader John A. Boehner, R-Ohio, when he was chairman of the Education and the Workforce Committee — would renew many provisions of the 1998 Higher Education Act (PL 105-244), which authorizes more than $70 billion in federal aid to college campuses and students.

The law was set to expire at the end of fiscal 2003, but has been extended several times as Congress has debated a broad rewrite. The most recent extension (PL 109-150) expires March 31. On Tuesday evening, the Senate cleared a new extension (HR 4911) lasting through June 30.

Direct and guaranteed student loan programs, which entail mandatory spending, were reauthorized for eight years by the fiscal 2005 budget reconciliation law (PL 109-171) enacted last month. That law made changes to the loan programs that raised interest rates and fees paid by students or their parents; cut some subsidies to lenders, and reduced federal spending on the programs by $12.7 billion over five years

The bill that the House is considering Wednesday and Thursday includes other provisions pertaining to the loan programs.

One would eliminate what is known as the “single-holder” rule for loan consolidations. That rule — long supported by Sallie Mae, the heavyweight of the college loan industry — requires student and parent borrowers to consolidate, or refinance, their loans with the lender that originally made them, even when they can obtain lower interest rates elsewhere.

“We anticipate, — and have anticipated for quite a long time now — that it would be repealed,” said Tom Joyce, a spokesman for Sallie Mae. “We welcome the competition.”

The bill also would boost the maximum authorized Pell grant for low-income students to $6,000 from $5,800 per year. However, since Pell grants are subject to appropriations, the actual maximum Pell Grant would depend on the amount appropriated for a given year. (The current amount appropriated permits a maximum of only $4,050.)

The bill would also authorize a new “Pell Grant Plus” program that would allow an additional $1,000 in each of the first two years of college. The total from the Pell Grant Plus program, the regular Pell grant and other federal financial aid programs could not exceed the cost of attendance.

Non-binding language in the bill that would encourage universities to not discriminate against students based on “personal political views or ideological beliefs” has been controversial, though no one offered an amendment to strike it. Republicans included the “academic bill of rights” language at the behest of conservative activists who contend that a liberal political climate at many universities has resulted in harassment of students with conservative views.

The bill also would make it easier for private for-profit colleges to compete for federal aid by redefining the term “institute of higher education” to include accredited for-profit colleges. Public and nonprofit universities argue that taxpayers should not be asked to subsidize for-profit schools. But Republicans say for-profit schools are increasingly important for “non-traditional” students, especially those changing careers.

Tuesday morning, negotiations aimed at reaching a consensus within the Education and the Workforce Committee on a rewrite broke down after ranking Democrat George Miller of California told Chairman Howard P. “Buck” McKeon, R-Calif., he could not achieve a consensus among Democrats to support the bill.

“For some reason there was a meeting of minds among the Democratic leadership that from this morning forward, this was going to be a partisan bill,” McKeon told the Rules Committee, which Tuesday night was considering which amendments would be allowed on the floor.

“We just don’t think that this is a marquee higher education bill,” Miller said, explaining that “possibilities were lost” when Republicans included the student loan changes in the reconciliation law. He called the bill “leftovers” and said he was offering a substitute amendment that would lower student loan rates, create new programs aimed to increase college attendance by black and Hispanic students and allow students to collect Pell grants year-round.

McKeon will offer a substitute amendment backed by committee Republicans. It would set a fiscal 2007 starting date for all reauthorizations in the bill, lasting for the succeeding five years. It would retain current law for the campus-based aid formula and require a Government Accountability Office study of that formula; add three new schools to the list of named institutions authorized to participate in the Historically Black Graduate Institutions program and allow funding to support anti-piracy efforts on college campuses.

Loan Program

The Rules Committee on Tuesday night began considering more than 100 proposed amendments to the bill. Rather than completing that job, the committee approved a rule that will allow the House to begin debating the bill and 15 amendments on Wednesday.

The list of 15 includes one by Dan Burton, R-Ind., to require colleges and universities that receive funds under international education programs to disclose contributions and gifts under the Integrated Postsecondary Education Data System. A bipartisan group of five House members will offer an amendment to authorize funds to recruit and train a national corps of top recent college graduates who commit to teach in low-income communities. Melissa A. Hart, R-Pa., will offer an amendment to establish student services offices that can assist pregnant students and students who are already parents in locating child care, family housing, flexible academic scheduling and various counseling and support services.

The Rules Committee is expected to meet again on Wednesday to approve another rule that would outline any additional amendments that would be allowed, and provide for a final vote on the legislation Thursday.

Among the amendments under consideration by the Rules panel was one by Tom Petri, R-Wis., cosponsored by Miller, to encourage colleges to use the government’s direct loan program, rather than government-subsidized loans sold by Sallie Mae and other lenders.

Several government studies have said the direct loan program is more efficient; White House budget officials agree. But Boehner and many other Republicans prefer providing loans through private lenders.

Another proposed amendment, by Rahm Emanuel, D-Ill., would repeal three student loan provisions recently enacted in the budget reconciliation law. Emanuel’s office said in a news release that the changes totaled a $12 billion decrease in student aid.

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