May 7, 2004

• HEA Reauthorization
• FY2005 Appropriations
• Joint Interim Committee on Higher Education
• Sunset Advisory Commission Review of TG

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HEA Reauthorization

To date, three comprehensive HEA reauthorization bills have been introduced — two by Democrats. House bill (HR 3180) and Senate bill (S 1793), and one Republican (HR 4238). The Democratic bills include significant increases in student aid authorizations and accountability provisions.

Both Democratic bills propose to:

• increase authorized funding levels for all Title IV programs reaching $11, 600 for the maximum Pell Grant by 2009;
• increase authorized funding levels for Title III and Title V institutions;
• increase authorized funding for the GEARUP and TRIO programs;
• increase the tax credit of the Hope Scholarship and Lifetime Learning Credit;
• repeal the Federal Direct Loan Program (FDLP) loan origination fee;
• establish financial incentives for institutions that participate in the FDLP;
• establish a grant program for consortia of institutions that propose programs that reduce the cost of education for students;
• establish a college cost summit involving the Education Department and representatives from institutions to develop collaborative plans to control college costs;
• allow reconsolidation of loans made through the FDLP;
• allow FDLP income contingent loan forgiveness for borrowers who are employed in the public sector, e.g., government, education, law enforcement, etc., and made (while employed in the public sector job) 120 payments through ICR;
• reduce subsidies paid by the federal government to FFELP lenders and holders of FFELP loans.

HR 4283 includes no authorized increases for the Title IV student aid programs, except for a new "Pell Plus" program which proposes to increase the annual Pell Grant by $1,000 for first and second year students who graduated from high school in a college preparatory curriculum. The bill repeals the student loan "single holder" provision. The bill also includes provisions from HR 12, HR 3039, HR 3613, HR 4102, HR 3311 (without the sanctions included in 3311), and HR 438.

The Senate Committee on Health, Education, Labor, and Pensions Republican staff has completed the Republican reauthorization bill and are in discussions with the Democratic minority to try to achieve a bipartisan bill before filing the bill.

It will be a race in the Congress to pass a reauthorization bill through both chambers before the scheduled adjournment date of October 1, 2004. Because of several other issues — some legislative and some purely political — 2005 appropriations bills, the growing annual budget deficits and debt, elections, the Iraqi war, as well as domestic issues like Social Security, improving last year's Medicare Reform bill, reauthorizations of the Head Start, Welfare Reform Act of 1996, and IDEA, and income tax reductions — completing the HEA reauthorization during the 108th Congress considering that the Congress is in recess for the entire month of August, two weeks for Memorial and Independence Days, and two weeks during the two party conventions will be difficult.

The Congress could simply extend the current HEA for another year — with or without changes — and let the new 109th Congress reauthorize the Act next year, or recess on September 30th, and reconvene after the November 2nd elections to complete any uncompleted work — including the HEA reauthorization.

Listed are student aid and Reauthorization related bills. Those bills with an "R" are bills introduced by members of the majority party and have the best chance of being considered by the House and Senate at this time.

R H.R. 12
The FED UP Higher Education Technical Amendments Act of 2003 incorporates provisions from the 107th Congress' failed HR 4866 by Representative Buck McKeon (R-CA). The bill includes the same provisions of the original HR 4866 as it was filed last summer, including:

• the extensions of the two provisions that expired on October 1, 2002 that allowed low student loan default rate schools to disburse loan funds in a single disbursement and to waive the 30 day delay for disbursement of loan funds to first time, first year borrowers (included in the Administration's Reauthorization proposals);
• clarification of two return of Title IV funds issues;
• allowing requests for student loan repayment forbearances to made in ways other than in writing;
• allowing students who were home schooled to be eligible for Title IV student aid.

Two new provisions added to HR 12 are:

• allowing the discharge of student loan debt for spouses of police, firefighters, rescue and safety personnel, and members of the Armed Forces who died or became permanent and totally disabled as a result of the September 11, 2001 attacks in new York and Washington, DC; and
• allowing the waiver of the 50 percent restriction on an institution's ability to offer coursework through telecommunications for institution's with student loan default rates below 10 percent.

R H.R. 438/H.R. 647
Increases the student loan forgiveness amount for math, science, and special education teachers to $17,500. (Included in the Administration's Reauthorization Proposals)

Passed by the full House.

H.R. 696
This bill clarifies that only current students convicted of a drug offense are ineligible to receive Title IV student aid. (Included in the Administration's Reauthorization proposals)

H.R. 942/S. 835
Repeals the student loan single holder provision.

H.R. 1304
Amends the student interest tax deduction law by making it a tax credit.

H.R. 1306
The College Opportunity for a Better America Act of 2003 provides student loan forgiveness to student loan borrowers who are employed in public service jobs in shortage areas, including teachers, child care workers, nurses, and child welfare workers and replaces the income sensitive repayment provisions in the FFELP to income contingent.

H.R. 1684
The Student Adjustment Act proposes amend the 1996 Illegal Immigration Reform and Immigrant Responsibility Act and the Immigration & Nationality Act to grant permanent legal residency status to middle school, high school, and college students who are undocumented immigrants who have been in the U.S. for at least five years.

R H.R. 2211
The Ready to Teach Act proposes to align the teacher training programs in the HEA with those established under 2001's No Child left behind Act (PL 107-110).

Passed by the full House.

H.R. 2238
The Next Generation Hispanic Serving Institutions bill is the Congressional Hispanic Caucus' HEA Reauthorization legislation. The bill proposes to establish new grant program to promote graduate programs at HSIs.

H.R. 2504
The Student Loan Fairness Consolidation Act of 2003 proposes to allow student loan borrowers to refinance their consolidated student loan debt consolidated under the current variable rate formula for Stafford loans.

H.R. 2505
The College Loan Assistance Act of 2003 proposes to allow student loan borrowers to refinance their consolidated student loan debt at a fixed, weighted average rate capped at 6.8 percent, increase the maximum Pell Grant to $7,000 in 2004, and repeal the student loan origination fee.

H.R. 2622/S. 1753
These bills propose to amend the Fair Credit reporting Act (FCRA) to extend preemptions of state credit reporting laws that expire on January 1, 2004, establish new provisions to prevent identity theft, increase consumer access to credit information, improve the accuracy of credit information, and promote financial literacy. The California Congressional delegation opposed the bill because it preempts the California state law by requiring consumer opt-in provisions, allows the continued use of SSNs for identification purposes, does not include language that requires consumers to be notified when an adverse credit decision has been made based on information in a credit report or language that allows a consumer to correct incorrect information, and is not tough enough on penalties for identity thieves that use stolen credit information to commit other crimes, e.g., terrorist acts.

Bill is in a House/Senate conference committee.

H.R. 2711
The Student Loan Fairness Act of 2003 is similar to 2504 and 2505. It proposes to repeal the single holder rule, allow reconsolidations of consolidated student loans at a variable rate of 2.3 percent plus the 91 Day Treasury Bill rate, capped at 6.8 percent, and also lowers the cap on Stafford and Plus loans 6.8 percent and 7.5 percent.

R H.R. 2956 — Financial Aid Simplification Act
This bill proposes to direct the federal Advisory Committee on Student Financial Aid to conduct another study on ways to simplify the SFA needs analysis process and the FAFSA, and to submit recommendations to Congress. (Included in the Administration's Reauthorization proposals)

R H.R. 3039 — Expanding Opportunities in Higher Education
This bill proposes to increase the funding authorizations for all Title IV programs, TRIO, minority serving institutions, GEARUP, and loan forgiveness for student loan borrowers working in public service jobs, and repeals the "90-10" and "50 percent" rules.

R H.R. 3076 — Graduate Opportunities in Education Act
This bill proposes to reauthorize Title VII of the HEA and adds new language that supports graduate programs that educates teachers in K-12 shortage areas, e.g., mathematics, science, English as a second language, and special education.

Passed by full House.

R H.R. 3077 — International Studies in Higher Education Act
This bill proposes to reauthorize Title VI of the HEA which establishes a program to support postsecondary education programs in international studies for students who wish to pursue careers in international relations and students who wish to become fluent in foreign languages.

Passed by the full House.

H.R. 3180 — College for All Act
This is the House Democrats HEA Reauthorization bill. Included among the bill's provisions are proposals to:

• increase authorized funding levels for all Title IV SFA programs to restore their 1985 buying power;
• increase funding levels and expand programs that focus on increasing access to postsecondary education for minority students and children of migrant farmers;
• allow student loan borrowers to reconsolidate their student loan debt with the lender of their choosing;
• repeal student loan fees paid by the borrower;
• establish a new program to establish and enhance graduate programs at HSIs;
• increase authorized funding levels for minority serving institutions.

R H.R. 3311 — College Affordability in Higher Education Act of 2003
This bill proposes to place a flexible federal formula cap on the annual increase in the cost of education charged by different types of postsecondary education institutions. The bill also includes a "college affordability experimentation site program" that proposes to provide regulatory relief to institutions that develop and implement "innovative approaches to delivering higher education while increasing college affordability". The bill's effective date in 2008, with actual implementation beginning in 2011.

H.R. 3384 — Student Loan Interest Full Deductibility Act
This bill proposes to remove the annual $2,500 interest cap and $65,000 annual income cap from the student loan interest income tax deduction.

R H.R. 3412 — Higher Education Affordability and Equity Act
This bill proposes to repeal the cap on the annual student loan interest income tax deduction, increase the maximum annual income to qualify for the deduction to $100,000 and $200,000, increase the annual maximum contribution to education savings accounts to $5,000, and exclude the amount of gift aid from the income calculation for student financial aid.

H.R. 3519 — College Affordability and Accountability Act
This bill includes similar the provisions as those included in S 1793 concerning encouraging and rewarding state's and institutions to control tuition costs in exchange for increased Pell Grant funds. It directs the Advisory Committee on Student Financial Aid to conduct a study on college costs and make recommendations to the Congress on effective ways the federal, state, and institutions can best finance higher education.

R H.R. 3613 — Student Aid Streamlined Disclosure Act
This bill proposes to require income verification for all Pell Grant recipients through a data match with the IRS. The bill is being promoted as a way to use up to $400 million annually in mistakenly awarded Pell Grant money to ineligible students to award to eligible students. (Included in the Administration's Reauthorization proposals)

R H.R. 3894 — The Pell Grants Plus Act
This bill proposes to award an additional $1,000 Pell Grant to recipients who have graduated from high school with a college preparatory diploma.

H.R. 3968 — The Part Time Student Assistance Act
This bill proposes to establish a year round Pell Grant pilot program.

H.R. 4102 — Access and Equity in Higher Education Act
This bill proposes to:

• increase annual and aggregate subsidized and unsubsidized student loan limits, allowing institutions flexibility to award reduced loan amounts;
• phase out the FFELP origination fee, and require an origination fee in the FDLP;
• simplifies the student loan repayment plans by repealing the scheduled fixed interest rate for student loan repayment, maintains the variable rate for regular student loans, and applies it to student loan consolidations.

The bill allows the interest rate on a borrower's loan to be reduced when the borrower's total monthly repayment amount exceeds a set percentage of the borrower's income. The bill also reauthorizes and increases the authorized appropriation to Title III of the HEA.

R H.R. 4136 — The Education Tax Simplification Act
This bill proposes to merge the Hope Tax credit and lifetime learning tax credit into a single credit that would equal 50 percent of a taxpayer's qualified education expenses (tuition, fees, books, and room and board), up to $3,000 annually.

R HR 4283 includes no authorized increases for the Title IV student aid programs, except for a new "Pell Plus" program which proposes to increase the annual Pell Grant by $1,000 for students who graduated from high school in a college preparatory curriculum and repeals the student loan "single holder" provision. The bill also includes provisions from HR 12, HR 3039, HR 3613, HR 4102, HR 3311 (without the sanctions included in 3311), and HR 438.

S. 589 — Homeland Security Workforce Act
This bill proposes to allow the forgiveness of federal student loan debt up to $60,000 for borrowers who work in national security positions within the federal government for at least three years.

Passed the Senate.

S. 1742
This bill proposes to establish a variable interest rate for consolidation loans and maintain the variable interest rate for regular Stafford loans. (Included in the Administration's Reauthorization proposals.)

S. 1793 — College Quality, Affordability, and Diversity Act
This bill is the Senate Democrats' Reauthorization bill. Like the House Democrats' bill, it proposes to:

• increase authorized funding levels for all Title IV programs reaching $11, 600 for the maximum Pell Grant (like HR 3180) by 2009;
• increase authorized funding levels for Title III and Title V institutions;
• increase authorized funding for the GEARUP and TRIO programs;
• increase the tax credit of the Hope Scholarship and Lifetime Learning Credit;
• repeal the Federal Direct Loan Program (FDLP) loan origination fee;
• establish financial incentives for institutions that participate in the FDLP;
• establish a grant program for consortia of institutions that propose programs that reduce the cost of education for students;
• establish a college cost summit involving the Education Department and representatives from institutions to develop collaborative plans to control college costs;
• allow reconsolidation of loans made through the FDLP;
• allow FDLP income contingent loan forgiveness for borrowers who are employed in the public sector, e.g., government, education, law enforcement, etc., and made (while employed in the public sector job) 120 payments through ICR;
• reduce subsidies paid by the federal government to FFELP lenders and holders of FFELP loans.

R S. 1968 — Financial Literacy in Higher Education Act
This bill proposes to build on the consumer financial literacy provisions included in HR 2622 passed in November 2003 and signed into law. The bill would fund five pilot financial literacy projects at universities to improve financial and economic literacy of college students.

R S. 2048
This bill proposes to make permanent the income tax deduction for qualified tuition expenses enacted as a temporary provision in 2001.

R S. 2050
This bill proposes to make permanent all of the education related income tax provisions enacted as temporary provisions in 2001.

S. 2087
This bill proposes to expand the Hope Scholarship tax credit to $2,500 per year and for four years of college, and directs the Treasury department to develop a mechanism to immediately credit the institution with the tax credit benefit.

S. 2360 — The Nontraditional Student Success Act
This bill proposes to:

• increase the maximum authorized Pell Grant to $11,600 by 2010 and make it a year round program;
• increase funding for the TRIO and Gear Up programs;
• increase the income protection allowance for working independent students from $5,000 to $13,000 and to $18,000 for students with children;
• exclude the EITC and child tax credit from inclusion in the need analysis process;
• increase the percentage of education expenses that can be counted towards the Lifetime Learning tax credit from 20 percent to 50 percent;
• make Pell Grants available year-round.

S. 2198 — Consolidated Student Loan Reduction Act of 2004
This bill proposes to allow borrowers who have consolidated their student loans to refinance at a lower interest rate when their current interest rate exceeds by at least 1 percent the interest rate on regular Stafford Loans.

R S. 2206/H.R. 3894 — The Pell Grant Plus Act
This legislation proposes to provide a supplemental $1,000 Pell grant to Pell Grant recipients who are designated as State Scholars.

These bills, and related information, will be able to be accessed at thomas.loc.gov.

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FY2005 Appropriations

The Congress continues to struggle with adoption of a final Budget Resolution. The House-passed and senate-passed versions of the Resolution — which is the necessary blueprint for the House and senate Committees to use in developing the 13 annual appropriations bills and tax legislation — is in a conference committee. The bills are nearly identical in terms of the bottom line amount of appropriations proposed, but include a couple of major differences, including a Senate unfunded set aside of close to $9 billion to fund the Pell Grant shortfall and changes anticipated as a result of the HEA reauthorization and a comprehensive pay-as-you-go provision, also included in the Senate bill, which would require future tax reductions to be fully offset by spending cuts.

No increases are included in either Resolution for Title IV student financial aid programs, except for funding for the proposed "Pell Plus" program.

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Joint Interim Committee on Higher Education

Future hearing dates for the Committee are May 11th and May 18th. For additional information about the Joint Committee go to www.house.state.tx.us/committees/835.htm.

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Sunset Advisory Commission Review of TG

The Sunset Advisory Commission review of TG began with a staff review beginning on April 27 and 29th with the staff entrance interview and corporate overview meeting. Staff interviews with selected TG operational staff will begin during the week of May 9, 2004.

The schedule calls for the staff to complete its report to the Commission by Mid September 2004. The Commission will convene in a public hearing in Austin to receive the staff's report, TG's response, and public testimony in mid November 2004. The Commission will then adopt the final staff report in mid December 2004. The Regular Session of the 79th Texas Legislature, which convenes on January 11, 2005 for 140 days, will consider legislation to "reauthorize TG for another 12 years".

Anyone wishing to provide input to the Sunset staff concerning TG, or TG's Self Evaluation Report (SER), can do so now by completing the Feedback Form at www.sunset.state.tx.us/question.htm. TG's SER can be accessed at the same website at www.sunset.state.tx.us/79threports/tgsl/ser.pdf.

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For more information, contact:

TG Congressional and Legislative Relations
(512) 219-4503
P.O. Box 83100
Round Rock, TX 78683-3100