April 5, 2006

• House Completes Work on Higher Education Act Reauthorization
• House Budget Committee Adopts FY 2007 Budget Resolution

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House Completes Work on Higher Education Act Reauthorization

With about 6 weeks worth of days left in this Congress, the House of Representatives finally, after eight years, took up and passed HR 609 — The College Access and Opportunity Act — the reauthorization of the Higher Education Act.

The final vote came after several Democratic and bipartisan committee and floor amendments aimed at increasing authorized spending for student financial aid programs and rewarding schools that choose to participate in the less expensive of the two major student loan programs were defeated by largely party line votes. The vote to pass the bill was 221-199, with 18 Republicans voting against and 14 Democrats voting in favor of passage. Four Texas Democrats and one Texas Republican voted against the bill. Seven Republicans and five Democrats did not vote.

HR 609 now goes to the Senate were it is expected to be referred to the Health, Education, Labor, and Pensions Committee where it will probably remain for the remainder of this congressional session.

The Republican House bill is built around increased federal oversight of colleges and universities.

Key provisions of HR 609 include:

• All Parts and Titles of the HEA are reauthorized.
• The authorized annual maximum Pell Grant is increased from $5,800 to $6,000 through 2013. The current actual maximum Pell Grant is $4,050.
• The Academic Competitiveness Grant program established in the 2005 Deficit Reduction Act is reauthorized.
• The definition of "institution of higher education" is expanded to include for-profit schools. However, they may not participate in Title III or Title V programs.
• A College Affordability Index is established which requires institutions to submit college cost data to the Education Department for publication on the College Opportunity On-line (COOL) website and the Integrated Postsecondary Education Data System (IPEDS), and includes sanctions for institutions that increase their annual cost by more than twice the CPI for three consecutive years.
• Prohibition of schools from denying transfer credit based solely on the accreditation of the sending school.
• Repeal of the Learning Anywhere Anytime program.
• The creation of nationwide databases using personally identifiable information on students receiving federal student aid or attending a higher education institution is prohibited.
• Application of the "90/10" income rule to all higher education institutions and repeals the "50 percent rule" for distance education courses, except correspondence courses.
• Many of the Advisory Committee on Student Financial Aid's recommendations concerning simplification and access included in its 2005 report, The Student Aid Gauntlet.
• Loan forgiveness is expanding to include specified "service in areas of national need".
• Consolidation loan debt counts against aggregate borrowing limits and the bill specifies disclosure information a lender and school must make available to an applicant.
• The "single holder rule" is repealed.
• The VFA process is made subject to public comment through publication of proposals in the Federal Register.
• FFELP participants must enter into agreements with specified national credit bureau reporting agencies.
• FFELP participants must provide student loan information in a free and timely manner when requested to schools and third party servicers for use in carrying out default prevention efforts.

Additional information about HR 609 is accessible at edworkforce.house.gov.

The Senate version of the bill — S 1614 — is still pending in the Senate and, if the Senate even takes up the topic, will be the bill considered and passed by the Senate, because the Senate bill is more generous to students, families, and institutions, and, consequently, more popular to the bill's constituencies.

Congress already renewed Part B and D of Title IV (student loan programs) and a few other parts of the Act in December as part of the Deficit Reduction Act.

That legislation (PL 109-171) cut almost $12 billion from the student loan program over five years, with the savings to going to deficit reduction.

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House Budget Committee Adopts FY 2007 Budget Resolution

While the House of Representatives was debating and passing HR 609, the Republican HEA reauthorization bill; a bill not likely to be considered by the Senate — the House Budget Committee was marking up and passing its version of the FY 2007 budget resolution; H. Con. Res. 376.

Committee Chairman Jim Nussle (R-IA) laid out the Republican budget blueprint before his Committee last week. The resolution calls for level funding for most discretionary non-defense/security programs, reductions for others, and another round of reconciliation spending reductions for entitlement programs, albeit smaller than last year's $39 billion.

The resolution comports with the administration's discretionary spending cap of $873 billion for the next fiscal year.

The resolution was approved by the Committee, after the defeat of several amendments to add spending to education and health and human service programs, on a straight party line vote of 22-17.

For entitlement spending, the resolution proposes reconciliation reductions totaling $6.75 billion over five years doubling the amount in the Senate resolution. The Ways and means Committee directed to "find" $4 billion in savings and the Education and Workforce Committee to do the same to the tune of $1.32 billion. This amount is assumed to come from the savings to be realized from legislation revamping the Pension Guaranty Fund.

The Senate-passed budget resolution (S. Con. Res. 83) contains one reconciliation instruction to the Energy and Natural Resources Committee, and assumes the panel will report legislation raising $3 billion in receipts from opening the Arctic National Wildlife Refuge (ANWR) to oil exploration and drilling. The Senate measure also exceeds the Administration's requested $873 billion discretionary spending cap by $16 billion, with an additional $7 billion for education, health, and human service appropriations over and above the Administration's proposal.

The House Budget Committee-passed Republican resolution assumes the extension of 2001 and 2003 tax cuts that expire during the FY 2007-2011 period, includes the administration's proposed 7 percent and 3.8 percent increases in defense and homeland security spending, includes a $50 billion "place holder" appropriation for spending for the Iraq and Afghanistan operations, and $3.3 billion and $2.3 billion for Gulf Coast flood damage and avian bird flu costs, respectively.

The dramatic differences in the Senate-passed and House Committee-passed budget resolutions means that a conference committee will be required to arrive at a single resolution by the April 15th deadline before either chamber can act on the eleven FY 2007 appropriations bills during an already shortened congressional session. At this point, it appears more likely than not that the appropriations bills will have to be voted upon without a budget resolution.

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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