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January 26, 1996 |
With the current continuing resolution (CR) expiring tonight, the House yesterday passed H.R. 2880, the "Balanced Budget Downpayment Act," to extend spending authority for the U.S. Department of Education (ED) and other agencies until March 15. An effort by Rep. Bonior (D-MI) on the House floor to continue ED funding at last year's levels (fiscal year 1995) garnered 190+ votes but failed, and the bill has moved on to the Senate. If passed by the Senate in its current form (which is expected to happen today), the President will sign it into law.The new legislation is generally similar (but not identical) to previous CRs (for ED), which set funding at the lower of (1) the fiscal year 1995 level, or (2) the House-passed level, except that education programs were not to be cut below 75% of 1995 levels.
Like the previous CR, the bill would cut discretionary funding for ED programs at a rate of more than 11 percent, equivalent to a $2.7 billion annual cut.
The new CR differs from the old in terminating (at least during the period of the CR) a handful of programs the Administration had requested be terminated -- such as the Dropout Prevention Demonstration program and Cooperative Education -- and in setting somewhat different funding parameters for several other programs, such as the Women's Educational Equity and Bilingual Education Support Services.
A more complete analysis of the CR and what it means for the Department and for education programs will appear in ED Initiatives early next week.
NO FURLOUGHS! Please note that, while the new CR does allow agencies to save money by furloughing employees between now and March 15, THERE WILL BE NO FURLOUGHS for U.S. Department of Education employees.
Clarification: Most large Department programs are "forward funded" (Impact Aid, Vocational Rehabilitation, and Libraries are among the few exceptions). This means the funds that school districts and states are receiving for Title I and other formula grant education programs THIS school year (1995-96) were appropriated by Congress LAST fiscal year (FY 1995, which ended September 30, 1995). Most of the funds in jeopardy under the continuing resolutions are not those received by schools this year, but funds for the COMING school year (1996-97). Uncertainty about next year's funding undercuts the ability of schools, school districts, universities, and states to PLAN. And planning, most people agree, is essential to improving teaching and learning.
Second-year funding awards were made to Iowa, Minnesota, and Missouri this week. Both MN and IA have submitted comprehensive education reform plans which are in the process of being evaluated by a peer review panel. Thirty-six states have received second-year Goals 2000 funding, and 14 states' comprehensive education improvement plans have been peer-reviewed and approved.
"Our second challenge is to provide Americans with the educational opportunities we need for a new century," President Clinton said in his State of the Union address Tuesday evening. He went on to say:"Every classroom in America must be connected to the information superhighway, with computers, good software and well-trained teachers. We are working with the telecommunications industry, educators and parents to connect 20 percent of the classrooms in California by this spring, and every classroom and library in America by the year 2000. I ask Congress to support our education technology initiative to make this national partnership successful.
"Every diploma ought to mean something. I challenge every community, school and state to adopt national standards of excellence, measure whether schools are meeting those standards, cut red tape so that schools have more flexibility for grassroots reforms, and hold them accountable for results by embracing our Goals 2000 initiative.
"I challenge every state to give all parents the right to choose which public school their children attend and let teachers form new schools with a charter they can keep only if they do a good job.
"I challenge all schools to teach character education: good values, and good citizenship. And if it means teenagers will stop killing each other over gang jackets, then public schools should be able to require school uniforms.
"I challenge parents to be their children's first teachers. Turn off the TV. See that the homework gets done. Visit your children's classroom.
"Today, higher education is more important than ever before. We have created a new student loan program that has made it easier to borrow and repay loans; and dramatically cut the student loan default rate. Through AmeriCorps, our national service program, this year 25,000 students will earn college money by serving in their communities. These initiatives are right for America; we should keep them going.
"And we should open the doors to college even wider. I challenge Congress to expand work study and help 1 million young Americans work their way through college by the year 2000; to provide a $1,000 merit scholarship for the top 5 percent of graduates in every high school; to expand Pell Grant scholarships for deserving students; and again, to make up to $10,000 a year of college tuition tax deductible."
[ The entire State of the Union Address ]
On January 22, Secretary Riley announced that the national student loan default rate has been cut almost in half, from 22.4 percent three years ago to 11.6 percent for the most recently reported year. The new rate marks the greatest one-year percentage drop since official student loan default reporting began with the fiscal year (FY) 1988 rate. The new default rate -- which is based on FY 1993 data (the most current available) -- represents a "snapshot in time" of borrowers scheduled to begin loan payments in that year who defaulted in either that year or the following year.Since the start of the Clinton Administration, the net cost of student loan defaults has dropped by more than two-thirds -- from $1.7 billion in FY 1992 to $400 million in FY 1995. The Department's defaulted loan collections have increased five-fold from 1993 to 1995.
Defaulters face serious sanctions, including federal income tax refund offset, wage garnishment, denial of further student aid, and loss of other forms of loans and credit. However, defaulters now have the option to consolidate their loans and establish an income-based repayment plan in order to avoid sanctions.
Riley said that with a new National Student Loan Data System (NSLDS), the Department is further improving its monitoring of student aid applications to prevent ineligible students -- and students who provide false information -- from receiving federal student aid funds. In the current school year, the NSLDS blocked the issuance of $230 million in loans to ineligible applicants.
"The dramatic decline in default rates, coupled with an equally impressive rise in defaulted loan collections, has reduced the taxpayers' burden by millions of dollars," Riley said. "These numbers reflect real and substantial progress. They are a result of our serious work at the U.S. Department of Education to improve our accountability." Riley also credited schools for their efforts to reduce defaults and Congress for authorizing a broad range of tough sanctions to control defaults.
Riley said student loan borrowers who believe they may be in default on a federal student loan should contact the holder of the loan for additional information on repayment options that are available. For accounts currently being handled by the Department, or to attempt to locate a past due account, borrowers may call the department's Debt Collection Customer Service Center at 1-800-621-3115.
For additional information, please see this press release in our Online Library -- "National Student Loan Default Rate Hits All-Time Low."
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[Past Issues of ED Initiatives] 
Last Updated -- Jan. 29, 1996, (pjk)
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