House Begins Reauthorization Process, Introduces Three New Bills
Karen McCarthy, NASFAA Policy & Federal Relations Staff
Yesterday various members of the House Education and the Workforce committee introduced three separate bills related to higher education affordability and transparency. The bills address the use of prior-prior year income (PPY) in need analysis, counseling for students, and transparency for students and families.
Prior-Prior Year Income
The “Simplifying the Application for Student Aid Act” would require the Department of Education (ED) to use PPY in the federal need analysis. NASFAA has advocated for this change to the basis of the expected family contribution (EFC) calculation as part of its reauthorization recommendations. The use of PPY would offer more time for students and families to evaluate award offers from institutions and make an informed decision about where to attend college, and could also enhance use of the Internal Revenue Service’s Data Retrieval Tool (IRS-DRT). This tool simplifies the application process and decreases the burden of income verification. Research on PPY conducted by NASFAA shows that dependent students from very low-income families and independent students with dependents of their own (two of the neediest cohorts) could benefit from a switch to PPY.
The “Empowering Students Through Enhanced Financial Counseling Act” would implement new requirements designed to ensure that students make informed decisions when accepting federal loans and Pell Grants.
The bill would change the current one-time entrance counseling requirement for student loans into an annual counseling requirement that must be completed before the student accepts the loan. Passive confirmation of a subsequent loan would no longer be permitted. That is, students must, annually, actively accept every loan by either signing a Master Promissory Note or signing a statement accepting the loan.
The required content of exit counseling would be expanded to include more borrower-specific information, including:
- Contact information for the servicers of each of the borrower’s loans
- To the extent practicable, a summary of the outstanding balance of principal and interest due on the loans made to the borrower
- Information on the repayment plans available, including a description of the different features of each plan and information, based on the borrower’s outstanding balance, showing the borrower’s anticipated monthly payments, and the difference in interest paid and total payments, under each plan
The bill also calls for annual counseling for Pell Grant recipients (regardless of whether they are also borrowing a loan) prior to the first disbursement of a Pell Grant in an award year. The counseling must include explanations of:
- A Federal Pell Grant
- Approved educational expenses for which the student may use a Federal Pell Grant
- Why a student may have to repay the Federal Pell Grant
- The maximum number of semesters or equivalent for which the student may be eligible to receive a Federal Pell Grant, and a statement of the amount of time remaining for which the student may be eligible to receive a Federal Pell Grant
- How the student may budget for typical educational expenses and a sample budget based on the cost of attendance for the institution
- How the student may seek additional financial assistance from the institution’s financial aid office due to a change in the student’s financial circumstances, and the contact information for such office.
ED would be required to develop consumer-tested, online counseling tools that meet statutory requirements.
The “Strengthening Transparency in Higher Education Act” would eliminate the College Navigator and its associated affordability and transparency lists, and state higher education charts released by ED. In its place would be a College Dashboard Website, which would be developed and maintained by ED. The Dashboard would include institutional-level information related to:
Basic institutional facts, such as its sector and web address
- Completion rates
- Financial aid
- Cohort default rates
The legislation would also mandate ED to include a method for users of the Dashboard to easily compare institutions.
These three bills begin to deliver on the step-by-step approach to reauthorization outlined earlier in the week by Rep. John Kline (R-MN), Chairman of the House Education and the Workforce Committee.
“I want to thank all of my colleagues for their hard work crafting these commonsense proposals, and am pleased to see bipartisan consensus starting to emerge,” said Chairman John Kline (R-MN) in a statement Wednesday. “We are committed to strengthening America’s higher education for students, families, and taxpayers. The legislation introduced today will begin to help improve a system that is too bureaucratic, too costly, and outdated. I look forward to continuing to move this process forward in the coming weeks as we look to keep the dream of postsecondary education within reach for all Americans.”
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