June 30, 2006

• One More Democratic Higher Education Reauthorization (HEA) Bill Introduced
• Commission Releases Preliminary Draft on Report

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One More Democratic Higher Education Reauthorization (HEA) Bill Introduced

S. 3593 — The Student Debt Relief Act — A bill to amend the Higher Education Act to provide additional support to students was introduced in the U.S. Senate on June 28th.

In introducing the legislation, Senator Kennedy outlined several familiar issues that S 3593 seeks to address.

The cost of attendance is over $12,000 at public colleges and over $26,000 at private colleges.

Federal student aid has not kept pace with these rising costs. The maximum Pell grant covered 51 percent of the cost of college in 1986, but it covered only 35 percent of the cost last year.

Families and students are borrowing more than ever from the federal government and from private banks to finance higher education.

Sixty-two percent of undergraduates at 4-year colleges are borrowing to finance their educations. The average student graduates with over $19,000 in student loan debt.

Each year 400,000 qualified students do not go to a 4-year college, because they cannot afford to do so.

High college costs and high student debt are discouraging young Americans from taking lower paying public service jobs, from buying homes, and even from getting married and starting a family.

After July 1st, students and families face one of the biggest student loan interest rate hikes in the history of the program — almost two percentage points in a single year.

S. 3593 proposes to:

• provide mandatory funding for an immediate increase in the maximum Pell grant from $4,050 to $5,100, with additional increases each year;
• reform the current student loan programs and use the savings to pay for additional increases in need-based aid through enactment of the Student Aid Reward Act, which, according to the Congressional Budget Office and Office of Management and Budget could generate $13 billion over ten years for new Pell grants;
• reduce student loan interest rates in half-to 3.4 percent for students and 4.25 percent for parents;
• give borrowers the option to help keep loan payments manageable by tying the payments to income level and capping the payments at 15 percent of a borrower's income;
• extend and expand a college tuition tax deduction that expired at the end of last year.

S. 3593, along with S.2573/HR 5150 — The Reverse the Raid on Student Aid Act and S. 3255 — The Student Loan Borrower Bill of Rights-form the Democrats legislative package for the HEA Reauthorization during the next Congress when it is anticipated that one, or both, chambers will be controlled by a Democratic majority.

The impetus for the introduction of all these bills is the findings reported in The College Cost Crunch, a report produced by the Democratic members of the Senate Health, Education, Labor, and Pensions Committee. The report can be accessed at http://kennedy.senate.gov.

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Commission Releases Preliminary Draft on Report

The Secretary of Education's Commission on the Future of Higher Education has released its draft report.

The draft is available at www.ed.gov/about/bdscomm/list/hiedfuture/reports.html.

The 27 page draft report drafted by consultants hired by the Commission Chair, Charles Miller, is a general criticism of American higher education with vague, general recommendations for improvement in the areas of access, affordability, quality, and accountability.

The recommendations concerning "affordability" include:

• Restructure and simplify the mix of federal student financial aid programs and substantially increase funding for need-based programs that are targeted at low income students and families.
• Following the Federal Advisory Committee on Student Financial Assistance's lead, find ways to bring and encourage other sectors to contribute to programs that promote access to postsecondary education.
• Replace the Free Application for Federal Student Aid (FAFSA) with a card size application in conjunction with information provided on the federal tax return to evaluate student financial need for student aid.
• Reward individual institutions for lowering their costs.

This initial draft was met with mostly skepticism and criticism by most of the 19 Commission members who felt that the report was too critical of higher education, not specific enough in its recommendations, and not reflective of the members' issues.

Over the next two months, the draft report will be hashed out by the 19 Commission members and those who drafted the report.

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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