Web Page Tools

TG's Legislative Report

For more information, contact:

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

June 5, 2008

Congressional Update

While the congress has extended the Higher Education Act through June 30, 2008, in March and April, Senator Kennedy and Representatives Hinojosa and Miller filed legislation (S 2815 — Strengthening Student Aid for All Act/HR 5715 — Ensuring Continued Access to Student Loans Act) in the congress that would partially address the "liquidity problem" beginning to develop within the FFELP.

On April 31st and May 1st, the House and Senate approved a compromise version of HR 5715 which included parts of both the Kennedy/Miller legislation. The legislation was signed into law on May 5th.

Also, in related actions, the Federal Reserve Board decided to begin accepting federally insured student loan securities as collateral through its Term Securities Lending Facility and the Department of Education and the FFELP lending community reached a temporary satisfactory agreement on how the Department will implement its temporary role as the FFELP "secondary market of last resort" that will provide lenders a one year opportunity to obtain liquidity from the Department sufficient to cover their costs and originate new FFELP loans. These policy changes will provide immediate, if only temporary, liquidity for the FFELP lending arena.

A copy and summary of HR 5715, and a related bill still pending in committee, HR 5914-The Student Loan Access Act, which proposes to provide the Treasury Department's Federal Financing Bank the authority to purchase federally insured student loans, invest in securities backed by federally insured student loans, and make advances to lenders to originate federally insured student loans, can be accessed at thomas.loc.gov.

FYI — The 110th Congress' final adjournment is scheduled for September 26, 2008, with 10 day and 30 day recesses in July and August.

Back to Top

Reauthorization Of The Higher Education Act

The conference committee report on the HEA reauthorization bill is all but complete and the sponsors are waiting for floor time to be made available for the bill to be placed on the House and Senate calendar. Unfortunately, both calendars are full with legislation that was scheduled to be dispensed with weeks ago.

However, House leadership has indicated that it plans to bring the legislation to the House floor, along with several other conference committee reports on housing, intelligence and consumer product safety, before the current extension expires.

In Senator Kennedy's absence, the Senator has designated Senator Barbara Mikulski (D-MD) to act in his stead as chief sponsor of the legislation.

At this time , several pieces of major legislation are crowding the congress' floor calendars, including, the war supplemental bill, energy bill, climate change bill and, of course, the 12 FY 2009 appropriations bills. Of these the appropriations bills — or a limited continuing resolution — must be passed prior to adjournment.

One strategy being discussed by congressional leadership is to allow appropriations, along with several other bills, to roll over into the 111th Congress when there is anticipated much larger Democratic majorities and, possibly, a Democratic administration.

On the subject of the FY 2009 budget and appropriations, the congress this week (June 1st) approved an election-year budget blueprint that leaves to the next president the task of sorting out a host of fiscal problems.

The House-Senate compromise measure allows large near-term increases in defense and domestic programs, but leaves hard decisions on Medicare and other federal entitlement programs to future policymakers.

It also manages to project small budget surpluses by 2012, but only by permitting several of the 2001 and 2003 federal tax cuts to expire as scheduled at the end of 2010.

The immediate impact is to provide a $24 billion (5 percent) increase for domestic programs for FY 2009 beginning Oct. 1. It also endorses Bush's $36 billion increase for the Pentagon's core budget, more than 7 percent.

But it relies on a host of questionable assumptions to predict a $340 billion budget deficit for next year, achieving it only by understating likely war costs — even if an anti-war Democrat takes back the White House — and assumes that Congress will raise taxes to finance the $50 billion-plus cost of "patching" the AMT.

The same assumptions call into question Democrats' promises to produce small surpluses by 2012.

The budget also extends some expiring tax breaks for business, and prevents doctors from absorbing cuts in their Medicare payments, and a major boost in the GI Bill for veterans college benefits at a cost of more than $50 billion over the upcoming decade.

Meanwhile, Democrats are slow-walking the 12 annual spending bills to avoid an election-season fight with Bush; they are unlikely to get passed into law until next year.

But the measure the Senate was considering Wednesday paints a bleak picture for the next president, who'll face tough decisions on cutting benefit programs to prepare for the retirement of the Baby Boom generation and whether it's possible to extend the full menu of Bush's tax cuts.

On taxes, the Democratic plan relies on a surge in tax revenues — averaging $129 billion a year — after 2010 to claim balance in four years.

The compromise budget plan promises to renew tax cuts aimed at the middle class, including the $1,000 per child credit, relief from the marriage penalty, estate tax cuts and the 10 percent tax rate on the first $7,825 of income for individuals.

But there's not enough money to extend cuts on income tax rates, capital gains and dividend income and still produce a surplus under the Democratic plan, which rejects Bush's proposed cuts to domestic programs.

All of this is to say, that in this environment, there are many moving parts and the substance and timing of the HEA reauthorization legislation is impacted by all of them, i.e., the lack of time, crowded congressional calendars, a very active election cycle, budget and appropriations, and conflicting congressional and national priorities.

Back to Top

State Legislative Update

The Feasibility Study for Restructuring Texas Student Financial Aid Programs mandated by the 80th Regular session of the Texas Legislature released its preliminary findings and recommendations.

Among the recommendations are to:

  • maintain the TEXAS Grant Program as the state's primary postsecondary education grant;
  • begin to phase in a merging of the TEG and TEOG into the TEXAS Grant Program, but maintain the separate revenue streams for each program until the merger;
  • align the eligibility and allocation formulas for the three programs;
  • focus the programs to the lowest income population groups;
  • maintain the TPEG Program as a campus-based program and the B-On-Time programs as a secondary incentive program for full-time students;
  • add a further merit component to the TEXAS Grant Program (1300 SAT, or rank in the upper 40 percent of one's high school graduating class, or complete the high school Distinguished Curriculum);
  • develop an eligibility pathway for low income nontraditional and independent students for a TEXAS Grant by earning an associate degree, or complete 12 hours of transferable general education courses with a 3.0 GPA, or complete 24 hours of transferable general education and/or major-specific courses;
  • use the federal Pell Grant and institutional definition of Satisfactory Academic progress for renewal TEXAS Grants;
  • maintain a decentralized administration of student financial aid programs with some new standardization of formulas and FAFSA priority dates;
  • merge smaller programs into a workforce shortage program and a college readiness program;
  • improve monitoring and accountability of the success of the state's programs.

The final report will be submitted to the Texas higher Education Coordinating Board in July and the legislature in the fall. The 81st Regular Session of the Texas Legislature will take up and consider legislation in 2009.

Back to Top