A r c h i v e d  I n f o r m a t i o n
Archives of Information on Priorities of Previous Administrations

"A Better Deal" for Students, Schools, and Taxpayers
Reauthorization of the Higher Education Act

The Administration's proposals for the reauthorization of the Higher Education Act (HEA) and the FY99 budget continue its strong support for postsecondary education and complement the historic higher education tax cuts enacted last year.

1. Make college more affordable. The student aid programs authorized under the HEA provide substantial support to students to help pay for the costs of postsecondary education -- more than $40 billion over the next year to nearly 8.5 million students.
   • Lower interest rates for students by allowing the scheduled 10 percent reduction in current interest rates to go into effect while moving from a long-term to a short-term instrument to provide lenders with an adequate return. Specifically, the maximum student interest rates would be the 91-day Treasury Bill rate plus 1.7 percentage points during the in-school period, and the 91-day Treasury Bill rate plus 2.3 percentage points during repayment.
   • Reduce origination fees by 1% for all student loans next year and eliminate them entirely for the most needy students by 2003, saving the average student $40 next year and low-income students $150 in 2003.
   • Help low-income students repay their loans as a share of their income by eliminating taxation of forgiven loans after 25 years of repayment.
   • Increase the maximum Pell Grant from $3,000 to $3,100 to provide a total of $7.6 billion in Pell Grants to nearly 4 million students -- a 35 percent increase under the Clinton Administration.
   • Increase Work-Study to $900 million to give more than 1 million students the opportunity to work their way through college next year. Efforts such as the American Reads Challenge enable students to earn money for college while helping others to read.
   • Encourage preparation for postsecondary education by providing financial and academic information through the $15 million College Awareness Information Program for adults pursuing another degree, middle and high school students, parents, teachers, and counselors.

2. Simplify the student aid process for students, families, and schools.
   • Simplify the student aid application process, allow for earlier decisions, and improve data accuracy by allowing the Secretary to use earlier income in determining need, with protections for low-income applicants. Consultation with relevant parties would occur first.
   • Reduce paperwork for students by allowing them to use the free federal aid form as the loan application for the government-guaranteed loan (FFEL program).
   • Adopt the fundamental elements of a performance-based organization for the delivery of student aid by hiring a highly skilled Chief Operating Officer and expanding contracting and managerial flexibility while holding the organization accountable for results and maintaining the Secretary's control of policy.
   • Allow the Secretary to exempt institutions from selected statutory and regulatory requirements if they have a history of successful administration of the student aid programs. For example, audit submissions might be required less frequently from these institutions.
   • Create a new refund policy that is less complex for schools to administer and for students to understand without compromising accountability for Federal funds.

3. Ensure students receive a quality education and taxpayer dollars are well spent.
   • Reduce excess profits and federal and lender costs in the government-guaranteed loan program by entering guaranty agencies into performance-based agreements and recalling unneeded federal reserve funds over 5 years. Under this proposal, standard procedures will be established that will greatly reduce compliance costs for lenders and schools.
   • Extend the requirement that 70 percent of all students graduate and 70 percent of all students find jobs to one-year vocational programs at proprietary institutions, with safeguards for exceptional circumstances.
   • Terminate the eligibility of institutions with high student loan default rates to participate in other federal student aid programs, including the Pell Grant program, with safeguards for exceptional circumstances.
   • Base institutional eligibility of stand-alone English as a Second Language (ESL) programs on performance of graduates on standardized tests.
   • Impose time limits on Pell recipients to encourage them to complete their education more quickly (the limits would be adjusted for part-time and disabled students).

4. Encourage Americans to work and save for college.
   • Let students keep more of what they earn and save by doubling the income protection allowance for dependent students and by raising significantly the income offsets for independent students. These changes would expand Pell Grant eligibility to nearly 300,000 more students.
   • Encourage further savings and simplify the aid application process by allowing the Secretary, after consultation with relevant parties, to change the asset calculation in the determination of need, with protections for low-income applicants. This would ensure that those who save for college are not penalized.

5. Help more low-income Americans prepare for and go to college.
   • Establish High Hopes for College to provide over 1 million needy students with information, tutoring, mentoring, and rigorous courses to prepare them for college by partnering colleges with up to 2,500 high-poverty middle schools over 5 years.
   • Increase funding for the TRIO programs by 10 percent, to $583 million, and increase their emphasis on projects in under-served geographic areas.
   • Raise the quality of education delivered to under-served students by increasing funding and creating a new part in Title III for Hispanic-Serving Institutions (to $28 million) and Tribal Colleges and Universities (to $5 million). Funding for Historically Black Colleges and Universities would increase to $134.5 million.

6. Help working Americans improve their wages and their lives through further education.
   • Broaden opportunities for distance learners by expanding student aid eligibility at degree-granting institutions and eliminating the different treatments in cost of attendance between distance learners and on-campus learners, while ensuring quality through accreditation. In 1995, 33% of all higher education institutions offered distance education to more than 700,000 students, and the interest in providing technology-based education continues to grow rapidly.
   • Encourage institutions to use innovative technology through the $30 million Learning Anytime Anywhere Partnership pilot programs that will provide support to expand geographical and institutional boundaries so that courses, faculty, development costs, and network facilities can be shared, creating economies of scale to make it financially feasible for providers while substantially increasing opportunities for students.

7. Recruit qualified teachers to high-need communities with a teacher shortage.
   • Create initiatives that attract 35,000 talented and dedicated teachers over the next five years in high-poverty urban and rural areas, and dramatically improve the quality of training and preparation provided to our future teachers through a $350 million initiative.

Return to Reauthorization page