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

9/25/98

The Higher Education Act (HEA) Reauthorization of 1998 includes a number of Clinton Administration-supported initiatives that:

• Increase access to college and make higher education more affordable;

• Simplify, improve, and modernize the student aid process for students and schools; and

• Improve teacher quality, preparation, and recruitment.

Specifically, we understand that the final HEA conference agreement:

Increases Access to College and Makes Higher Education More Affordable. In FY99, the student aid programs authorized under the HEA will provide $50 billion of aid to over 8.8 million students.

• Slashes the student loan interest rate from 8.25% to 7.46% -- saving $11 billion for students over the life of their loans.

  Extends for 5 years the low student interest rate on new loans, first won in the 1993 budget, proposed again in February by Vice President Gore, and available since July 1. The typical student borrower at a 4-year college, who graduates with $13,000 in debt, will save about $700 over a ten-year repayment period.

  Allows borrowers to refinance outstanding loans at the lower rate by extending for four months the current 7.46% interest rate on Direct Consolidation Loans. After four months, the consolidation rate in both loan programs will rise to the average rate of the underlying loans, weighted by loan size and capped at 8.25%.

  The Administration is disappointed that the bill contains an unnecessary new lender subsidy and that it does not extend the low student loan consolidation rate for a longer period of time or make it available to borrowers who consolidate their student loans through private lenders in the FFEL program. We will urge Congress to revisit these issues in the future.

• Launches a new national effort to help disadvantaged students prepare for college through the GEAR UP program that provides competitive grants to states and to local partnerships, based on the Administration's High Hopes for College proposal to challenge colleges to partner with middle schools in high-poverty areas to ensure that students receive financial aid information, rigorous courses, tutoring, mentoring and scholarships for college. The Senate's FY99 Appropriations bill allocates to GEAR UP $75 million of the $140 million requested by the President for High Hopes.

• Expands student aid eligibility for distance learners, a goal proposed by the Administration, through demonstration programs that waive some student aid restrictions to allow more nontraditional students to obtain higher education, including full-time workers, parents, people in rural areas, or people with disabilities.

• Helps develop new distance education partnership models through the Learning Anytime Anywhere Partnership (LAAP) program, an Administration initiative that provides competitive grants to partnerships between schools and other entities to: create new distance learning partnership models, explore the efficiencies and cost reductions possible through institutional partnerships, and develop innovative measures of student achievement in distance education. The Senate's FY99 Appropriations bill includes $10 million of the $30 million requested by the President for LAAP.

• Brings our student aid policies into the 21st Century by recognizing that computers today are as much a cost of college as books and tuition, and allowing students to get federal loans and grants to cover the cost of buying or renting a computer.

• Raises the quality of education delivered to underserved students and provides more visibility to Hispanic-Serving Institutions (HSIs), as proposed by the Administration, by moving the HSI program to a different title, simplifying the definition of HSI, and authorizing grants for Tribal Colleges.

• Increases aid available to students and encourages students to work and save for college, as proposed by the Administration, by raising significantly the amount of income that is exempted from consideration in determining financial need.

• Increases student aid awards for students from low-income families by allowing them to use more of their earnings to support their families.

• More effectively targets campus-based aid, as proposed by the Administration, by moving toward a formula that allocates funds to institutions based more on the actual needs of current students than on past participation.

• Increases access to Advanced Placement programs for low-income students by giving States more flexibility in the use of federal funds for activities that encourage low-income students to take Advanced Placement courses and tests.

• Provides new repayment options to FFEL borrowers, already available in Direct Lending, by allowing borrowers with $30,000 or more in student loan debt to take up to 25 years to repay their loans.

Simplifies, Improves, and Modernizes the Student Aid Process for Students and Schools:

• Creates the federal government's first-ever Performance-Based Organization (PBO) -- a concept promoted by Vice President Gore's Reinventing Government effort -- within the Department of Education to modernize student aid delivery. The PBO will be led by an executive with expertise in financial services and information technology, who reports directly to the Secretary and will have new administrative flexibility in exchange for increased accountability for results. The Secretary will continue to be responsible for setting student aid policy.

• Terminates the eligibility of institutions with high student loan default rates to participate in the Pell Grant program, with safeguards for exceptional circumstances, as proposed by the Administration.

• Allows guaranty agencies and the Secretary to promote greater administrative efficiency and improved service for students by authorizing voluntary flexible agreements in which the Secretary may waive or modify statutory or regulatory requirements.

• Dramatically reduces administrative burden on institutions by simplifying refund requirements without compromising accountability for Federal funds.

• Simplifies loan proration requirements by allowing schools to prorate loans under one formula regardless of the type of loan or student's year in school, rather than under two formulas as in current law.

• Mandates a study of the effectiveness and design of market mechanisms for determining lender returns on student loans, an Administration proposal that will provide information to make future improvements in the FFEL program.

• Simplifies the loan application process for students by allowing use of the FAFSA as the loan application in the FFEL program, as currently available in Direct Lending.

• Simplifies the process by which students apply for and receive federal student loans by authorizing use of a mater promissory note for FFEL and Direct Loans. In consultation with the higher education community, the Department has developed and prepared for use the procedures and notes for the introduction of a master promissory note.

• Helps safeguard students and institutions from disruptions in student aid delivery due to Year 2000 computer compliance problems by allowing the Secretary to delay selected provisions in the HEA legislation requiring systems changes, if the Secretary determines that earlier implementation might jeopardize the ability of a substantial number of schools, lenders, or guaranty agencies to make their systems Year 2000 compliant.

• Maintains funding for student aid administration at the levels agreed to in the Balanced Budget Agreement. The House bill would have cut Section 458 funds by $220 million over five years, jeopardizing the effective delivery of every major student aid program.

Improves Teacher Quality, Preparation, and Recruitment:

• Responds to the nation's shortage of high-quality teachers with a new three-pronged initiative, funded in the Senate's FY99 Appropriations bill at $77 million.

  Improves teacher preparation through grants to partnerships -- modeled after the Administration's proposed Lighthouse Partnerships -- between teacher education institutions and school districts to produce teachers who have strong teaching skills, are highly competent in the academic content areas in which they plan to teach, and know how to use technology as tool for teaching and learning.

  Recruits additional teachers for high-need areas through the Administration's proposed grants to partnerships between high-quality teacher education programs and local schools to offer scholarships, support, and services to recruit and prepare teachers to serve for at least three years in high-need schools.

  Supports state-level efforts to improve teacher quality through State Teacher Quality Enhancement grants to strengthen state teacher certification standards, create alternative pathways into teaching, hold higher education institutions accountable for the quality of teachers they prepare, and recruit high-quality teachers.

• Protects the National Board for Professional Teaching Standards, which sets standards of excellence for experienced teachers, recognizes and rewards outstanding teachers, and keeps our best teachers in the classroom where they are needed most.

• Strengthens accountability in teacher education by requiring that states and teacher education institutions report on teacher preparation, including their students' performance on teacher licensing exams.

• Helps attract and reward those who teach where the need is greatest by forgiving up to $5,000 of student loans after a teacher teaches for five years in a low-income community.

• Expands Pell grant eligibility for future teachers in states that require five years of higher education for teacher certification by allowing students in fifth-year teaching programs to receive Pell grants.

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