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Casting Light on the Reauthorization of the HEA

Casting Light on the Reauthorization of the HEA

Spring 2019

Chin-Chin Minniear

Walking with Jesus on Campus

Upon signing the Higher Education Act (HEA) into law on Nov. 8, 1965, President Lyndon B. Johnson said, “I doubt that any future Congress will ever erect a prouder monument for future generations.” And his words run true – this sweeping law that was crafted primarily to establish financial aid for college-bound students is a monument to our nation’s belief in the value of a college education. It governs student aid programs and lays out the rules and regulations for higher education institutions to be eligible for Title IV programs.

The HEA is supposed to be renewed, or “reauthorized,” every four to five years. The HEA has been comprehensively reauthorized eight times, most recently in 2008, as well as amended and extended by Congress numerous times.

During the 2008 reauthorization process, Congress sought to hold colleges and states more accountable for rising tuition and to help students make better borrowing decisions. Yet tuition and borrowing continue to rise. In fiscal year 2017, the government financed roughly $100 billion in student loans, $30 billion in need-based grants, and $30 billion in income tax preferences for postsecondary students.

CCCU students take out smaller loan amounts and are far less likely to default on payments than their peers (see “Reality Check,” page 24), but national trends aren’t as promising. Forty million student borrowers are currently paying off $1.5 trillion in student loans, and by 2023, nearly 40 percent are expected to default. In addition to the burden of student debt on borrowers and their families, the volume of debt is concerning due to the taxpayer exposure and liability.

Although many policy changes affecting student aid can now occur outside of the reauthorization process (e.g., through spending bills and federal rules), comprehensive reauthorization remains the best option for tackling these issues. Many are looking to the next reauthorization to address priorities such as college affordability, college accountability, better information for consumers, improved college access and completion rates, accreditation and oversight, and fewer federal regulations.

Inside the Beltway: Are the Stars Aligned?

The committees with primary jurisdiction over the HEA reauthorization are the Senate Health, Education, Labor and Pensions (HELP) Committee and the House Education and Labor Committee. After high hopes for HEA action in the last session of Congress, reauthorization negotiations stalled in the Senate.

Meanwhile, the House introduced the PROSPER Act, which was reported out of committee but failed to garner enough support for a floor vote. Many higher education groups opposed the bill, in large part due to its proposed elimination of popular programs like the Federal Supplemental Educational Opportunity Grant (FSEOG), which assists low-income students with remarkable need; the Public Service Loan Forgiveness program, which encourages a pipeline of future public servants and nonprofit employees; and federal loan subsidies, which provide in-school subsidies for needy students utilizing federal Stafford loans.

When the current session of Congress began on Jan. 3, Democrats reclaimed control of the House, boasting a 235-seat majority. Meanwhile, on the Senate side, the Republicans gained two seats after the midterms, enjoying a 53-47 split in their favor. Despite the houses of Congress now being controlled by different parties, this change may actually increase the odds of passing legislation. Why? Because legislation in a divided Congress can be enacted only with bipartisan support, and so it follows that legislators will work harder to cooperate, compromise, and steer clear of controversial provisions. So far, all indications are good that this is the intent around HEA reauthorization.

Senate: Early in the new Congress, Senator Lamar Alexander (R-TN), chair of the Senate HELP Committee, rolled out his priorities for HEA reauthorization and made clear his desire to get legislation enacted. His credentials alone (former college president, former governor, and former U.S. Secretary of Education) substantiate his investment in these efforts.

Additionally, Alexander does not plan to seek re-election in 2020, so he is undoubtedly motivated to pass an HEA reauthorization package as part of his legacy, and he is also freer to negotiate deals with a Democratic House. Ranking member Patty Murray (D-WA) has also signaled a strong desire to negotiate a comprehensive reauthorization package.

House: In late February, Chairman Robert “Bobby” Scott (D-VA) and ranking member Virginia Foxx (R-NC) of the House Education and Labor Committee jointly announced plans to hold five bipartisan hearings in an effort to reauthorize the HEA. While acknowledging that the Democrats and Republicans have “vast differences” in their approaches to higher education, Chairman Scott made clear the committee’s intention to work in a bipartisan way in order to produce a comprehensive bill.

Both congressional education panels have signaled that they would like to find a way forward, though the top three priorities for each chamber’s committee leadership vary:

House Democrats Senate Republicans
1. Expand college access 1. Simplify FAFSA
2. Improve affordability 2. Simplify loan repayment
3. Promote completion 3. Create new accountability

 

With that in mind, we’ve compiled the top five provisions to watch in the coming year.

Top Five Things to Look for in the HEA Reauthorization

  1. FAFSA Simplification

The Problem: The FAFSA (Free Application for Federal Student Aid) is known for being lengthy and complicated, yet every current and prospective college student is required to complete the form on an annual basis in order to determine eligibility for financial aid. Beyond the form itself, the requirements to refile the FAFSA every year can be an onerous process, particularly for students whose parents are divorced or for students from low-income families, which are more likely to lack computer availability (though the myStudentAid app that the Department introduced last summer allows a user to complete the FAFSA on a smart phone). Low-income families are also more likely to require verification, which can deter students from completing the process.

Proposed Solution: Shorten the FAFSA and make it more user-friendly. Each time Senator Alexander has presented his outline for updating the HEA in this Congress, he has started with FAFSA simplification. In its current format, the FAFSA has more than 100 questions; experts generally agree that it can be whittled down to 25.

Simplifying the application process and eligibility rules could also help students, especially those from low-income families. Congressman Scott has promoted ideas such as adding a recertification process whereby dependent Pell Grant recipients would complete the FAFSA just once before college and then recertify (instead of filing again) each subsequent year. Another possibility is presumptive eligibility for Pell Grants, whereby an applicant whose family satisfies the income criteria and has received certain means-tested federal benefits (like SSI or SNAP) during a specific time period could automatically qualify for Pell.

  1. Loan Repayment Simplification

The Problem: The U.S. has over 40 million student loan borrowers paying off $1.5 trillion in student loans. However, a 2018 Brookings Institution study suggests that 40 percent of borrowers may default on their loans by 2023. While the Department of Education offers eight different repayment plans, borrowers may have difficulty finding the balance between making lower monthly payments (in order to avoid delinquency or default) and trying to pay off loan balances more quickly (in order to avoid paying more interest).

Proposed Solution: Help students manage and repay their loan debt by simplifying the loan repayment system. Chairman Alexander has proposed reducing the number of repayment options to two: a flat 10-year repayment schedule or a schedule based on a borrower’s income. In both scenarios, payments could be automatically deducted from paychecks.

For those choosing the income-based system, a percentage of monthly “discretionary income” would deduct automatically from their paychecks. Discretionary income would be calculated by subtracting out the cost of necessities (based on a government-determined standard). This income-based system eliminates the current process of borrowers having to certify their income each year, and it allows for loan payment to automatically go on hold during periods of unemployment. The advantage here is for graduates with lower incomes, whose loan repayment would be spread over a longer time. Automatic collections should help reduce the default risk and ease the administrative burden for borrowers. A person who makes payments but hasn’t paid off their loan in full after 20 years could also potentially have their loan excused.

While Chairman Scott has not, to our knowledge, endorsed a specific type of a repayment system, he does support policies to make student borrowing less burdensome.

  1. Accessibility and Affordability

The Problem: Low-income students and students of color continue to face barriers to pursuing four-year degrees, which federal programs have always aimed to combat. Low-income students remain less likely to complete their bachelor’s degrees as compared with middle- or high-income students. Some common barriers cited include the cost of college, too few pathways to a four-year degree, and the lack of support services in college. Legislators have suggested various changes to financial aid, including to the federal Pell Grant program, created in 1972 to provide funding for low-income students.

Proposed Solution: While Pell Grants have historically had bipartisan support, some question the program’s efficacy and also suggest that increases in Pell might be linked to increases in the cost of college. One idea has been to demand more “skin in the game” from institutions seeking increases in aid and to suggest that any such aid be given only to students on a clear path toward graduation.

One proposal worth noting – developed by the National Association of Independent Colleges & Universities (NAICU) and supported by the CCCU – is called Pell Plus. Instead of distributing Pell Grants at the same flat rate over a period of six years, third- and fourth-year students who are on track to graduate could double the amount of federal aid received in their Pell Grant (an amount that would then be matched by the students’ institutions) during those years. This would give increased aid for needy students and promote on-time completion. Pell Plus would also allow students who have run out of Pell eligibility but have less than one academic year left in their studies to be able to access additional Pell aid to get them over the finish line.

Chairman Scott supports the expansion of Pell eligibility as well as “restoring the purchasing power” of Pell Grants. In addition, he has suggested incentivizing the states to provide more funding for college tuition, offering tuition-free community college, and providing additional supports for traditionally underserved students (e.g., first-generation students, parents, working adults) such as college access programs, free child care on campus, and tutoring services that focus on learning skill-building. Scott also supports facilitating more points of entry into postsecondary education, such as high-quality certificate programs and tuition-free community colleges.

  1. Second Chance Pell

The Problem: Although the Pell Grant program initially included incarcerated individuals, passage of the 1994 Violent Crime Control and Law Enforcement Act effectively blocked incarcerated individuals from accessing grants. Not only is education in prison associated with reduced recidivism, but it also results in good behavior and creates leaders who have a calming influence on other inmates and even prison employees. A 2019 report by the Vera Institute of Justice and the Georgetown Center on Poverty and Inequality makes the case that providing education to incarcerated individuals would not only lower recidivism and save millions each year in correctional costs, but it would also increase wages and provide a foundation for breaking intergenerational cycles of poverty and crime. Additionally, it would provide a larger labor pool of skilled workers.

Proposed Solution: Repeal the prohibition on Pell eligibility for incarcerated students. Under the experimental Second Chance Pell program (in place since 2016), federal Pell Grant funding has been given to otherwise qualified students who are incarcerated and who are eligible for release back into the community. Expanding this program beyond the current 67 postsecondary institutions could be a first step. Senator Alexander has signaled a willingness to repeal the ban as part of reauthorizing the Higher Education Act, and House Democrats are sure to support such a measure.

  1. Religious Mission

The Problem: The House Republican-backed bill from last Congress (the PROSPER Act), though not given a floor vote, provided protections for the freedom of assembly and religious liberty, with language designed to ensure that all campus practices and policies stemming from an institution’s religious beliefs would be respected as part of its “religious mission.” But in the current political environment (where compromise is king), religious liberty language is more likely to be excluded because of its controversial nature.

In 2018, Chairman Scott criticized the Department of Education for relentlessly chipping away “at civil rights protections, including civil rights protections in education.” He is a co-sponsor of the Do No Harm Act, which seeks to limit the use of 1993’s Religious Freedom Restoration Act, the law designed to protect religious individuals and organizations against government interference with the practice of their faith.

Proposed Solution: Encourage legislative language clarifying and protecting “religious mission” that is modeled after the language that federal rulemakers recently reached consensus on. In early 2019, the Department convened a negotiated rulemaking committee to revise its regulations related to the Title IV federal student financial aid programs. Among other things, the Department sought to make changes to regulations related to religious institutions’ participation in the Title IV programs.

We closely followed the negotiated rulemaking process that resulted in the committee agreeing upon clarified guidelines for accreditors to respect the mission of a school, particularly a school with a “religious mission.” If the final outcome of the negotiated rulemaking process is disagreeable to Chairman Scott, he could attempt to neutralize or negate the newly written Department regulations by amending the HEA legislation, but such action may not be realistic if it were to slow or halt progress on HEA.

Conclusion

Although Republican and Democratic priorities look different at first glance, the reality is that many of them are intertwined, since change in one area is likely to affect change in another area. For example, if the FAFSA form became easier to complete (Republicans’ first goal), then more potential students, particularly those from less-resourced families, would likely wish to apply for and receive financial aid (Democrats’ first goal). In addition, by creating new accountability structures for post-secondary institutions (Republicans’ third goal), this would help to prevent the proliferation of low-quality schools, which in turn could help to achieve Democrats’ third goal of promoting college completion.

At the end of the day, any legislative or regulatory changes made to higher education programs should be pursued with the express intent of better serving the students. At the CCCU, we advocate on behalf of our institutions to support that very goal.

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Chin-Chin Minniear is the CCCU’s legislative director. She holds a bachelor’s degree from the University of Chicago, a master’s in public policy from the University of Michigan, and a master’s in clinical psychology from Wheaton College (IL).