Archived Information

Reauthorization of the Higher Education Act

Dear Jim:

I am writing to you about S. 1882, which the Committee on Labor and Human Resources will mark up today to reauthorize the Higher Education Act of 1965 (HEA). I am sending an identical letter to Senator Kennedy.

I am pleased to see that the HEA reauthorization is moving ahead, and I thank you for your leadership. The Department of Education is continuing to review the bill and will provide more extensive comments later.

Your strong support for the Pell Grant and campus-based student aid programs will help to provide college access to many low-income Americans. I am pleased with the direction that you are taking regarding teacher recruitment partnerships and partnerships to improve teacher education. I also share your commitment to creating a performance-based organization to support the Department's initiatives to improve further the delivery of student aid. I am very pleased that a number of other proposals suggested by the Department were also included in the Senate bill, including proposals to reintroduce time limits on eligibility for Pell Grants; to require stand-alone English as a Second Language programs to show adequate performance by graduates to retain eligibility for federal aid; and to authorize the Department to develop and implement a multiyear promissory note for student loan programs. The following are specifics that I believe are critical for Congress to consider in your upcoming mark-up.

Making college more affordable while protecting taxpayers. Helping to ensure access to higher education for all Americans at the lowest possible federal cost is a high priority for the Administration.

• I am pleased that your student loan interest rate change, which is the same as the House Committee version, recognizes the need to provide a reduced interest rate to students while retaining access to student loans. Your proposal requires taxpayers to bear higher costs; doing that will reduce our ability to fund important education initiatives this year and in the future. In addition, as OMB Director Raines has indicated, your proposal, if it remains unfunded, could trigger a sequester, thereby raising student loan origination fees, and reducing funding for vocational rehabilitation, foster care and adoption assistance, Medicare, and other programs. We continue to believe, based on the recent Treasury report, that students can be protected without taxpayers subsidizing lenders. Other proposals to introduce market-based mechanisms into the FFEL program are also being considered and we look forward to working with you to resolve this issue in a way that protects students and taxpayers while ensuring FFEL loan availability.

• The guaranty agency financing proposal contained in the bill does not make the system more accountable to the taxpayer. It maintains the fiction that guaranty agencies are the insurers of student loans, and does not make meaningful reforms needed to promote efficiency by compensating guaranty agencies on a businesslike, fee for service basis. Additionally, adequate financing is not provided under section 458 to implement the new portfolio maintenance fee.

• I am disappointed that the bill does not provide cuts in loan origination fees for student borrowers to help reduce their costs of borrowing.

• I believe we need to do more in the area of distance education to accommodate institutions that are examining new ways to reach out to working parents, workers that need additional training, and students with disabilities. I urge you to broaden opportunities for distance learners by expanding student aid eligibility at degree-granting institutions and eliminating the difference in cost of attendance rules between distance learners and on-campus learners. In addition, I urge you to consider inclusion of our proposed new Learning Anytime Anywhere Partnerships program, which would support needed pilot projects to expand the accessibility, quality, and accountability of technology-based postsecondary education.

• I am also concerned that we continue the efforts that we and the Congress have taken to keep problem schools from participating in student aid programs and to reduce fraud, waste, and abuse. We have proposed a variety of items that would increase our enforcement authority, including expanding the 85/15 rule; extending to one-year vocational programs at proprietary institutions the requirement that 70 percent of all students graduate and 70 percent of all students find jobs, with safeguards for exceptional circumstances; and terminating institutions with high student loan default rates from all HEA student financial assistance programs.

Helping more low-income Americans prepare for and go to college. Another high priority for the Administration is helping more low-income Americans prepare for, and go to, college. I am very encouraged by the inclusion of much of our language on teacher recruitment partnerships and partnerships to improve teacher education, but I am disappointed with the 50-50 split in funding in Part A, between the states and the partnerships to improve teacher education. We hope you will also consider changes in the following areas:

• Since college participation rates of low-income Americans are still significantly lower than those of middle- and higher-income families, I urge you to enact the High Hopes for College initiative. This program challenges colleges to provide information, tutoring, mentoring, and exposure to college campuses to more than 1 million needy students over 5 years through partnerships with high-poverty middle schools, as well as state agencies, community-based organizations, and local businesses.

• Enacting the College Awareness Information Program would also help to encourage preparation for postsecondary education by providing financial and academic information to high school students, parents, teachers, and counselors, as well as working with adults pursuing further education.

• I am disappointed that you did not include our proposal to consolidate all the graduate fellowship programs into a single program with an emphasis on traditionally underrepresented groups in areas of national need.

• I urge you to consider the Administration's proposal to increase the emphasis of TRIO programs in underserved geographic areas.

• I am disappointed that you did not propose to increase gradually the portion of campus-based funds allocated based on "fair share," to reflect more accurately the current distribution of needy students.

Simplifying the student aid process for students, families, and schools. I am pleased that you made some steps towards simplification and burden reduction, such as eliminating the 30-day delayed disbursement for institutions with default rates of five percent or less, and eliminating multiple disbursement requirements for 4th and 5th year undergraduates attending institutions with cohort default rates of five percent or less. However, the draft bill does not include several other Administration proposals for simplification. It seems, in some cases, such as the Quality Assurance program, the Senate bill limits our current authority to reduce burden. I urge you to consider proposals that would benefit students, parents, colleges, and taxpayers, including:

• Allowing the Secretary to exempt institutions from selected statutory and regulatory requirements related to the administration of student financial aid as part of a performance-based system.

• Providing authority to issue regulations that would change how current law treats a family's assets to help promote savings, fairness and simplicity. The current federal student aid formula can unfairly penalize families who are responsible and save for college, and it unnecessarily burdens students and families.

• Creating a new refund policy that is less complex for schools to administer and for students to understand without compromising accountability for federal funds.

• Providing authority to issue regulations that would allow the use of earlier and easier student aid applications that would allow use of a different base year for purposes of determining student eligibility.

Further, we are committed to working collaboratively with the community to develop reasonable, non-burdensome regulations, as we did recently in the financial responsibility rule process. I have serious concerns, however, that the broad expansion of negotiated rulemaking requirements in this bill will delay publication of balanced, timely rules, and limit our ability to work with the community to focus our negotiating resources and theirs on selected high priority rules. I believe we can find a constructive common ground to advance our shared interest in public participation.

Again, I am pleased that the HEA reauthorization is moving ahead and look forward to continuing to work with you to help ensure that all Americans have access to a high-quality postsecondary education. The Office of Management and Budget advises that there is no objection to the submission of this report to Congress.

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