Senate Appropriators Pass Education Spending Bill
The Senate Appropriations Committee voted yesterday to approve the fiscal year (FY) 2013 Labor, Health and Human Services, Education, and Related Agencies Appropriations Bill. The Senate appropriations bill sets spending limits for the U.S. Department of Education at $68.52 billion, up from $68.11 billion in FY 2012. The full committee approved the bill on a party-line vote of 16-14.
The Senate’s FY 2013 spending limits for education are $1.31 billion less than the appropriations requested by President Obama in his FY 2013 budget.
Under the bill approved by the Senate committee, spending on most student-aid programs for FY 2013 would remain level to FY 2012 levels, including the Supplemental Education Opportunity Grant (SEOG) and Federal Work-Study programs. However, the maximum Pell Grant award would increase by $85, rising from $5,550 to $5,635 starting in the 2013-14 award year. This increase reflects a mandate from the 2010 Healthcare and Education Reconciliation Act (HCERA), which requires that the mandatory portion of Pell must be adjusted for inflation according to the Consumer Price Index, plus an additional 1 percent beginning in 2013. Discretionary appropriations to the program would remain level.
The bill would limit a student’s eligibility to borrow subsidized Stafford loans to a period that totals 150 percent of current program length. Note that the 150 percent limit applies to periods for which the student has borrowed subsidized Stafford loans. For example, a student who is enrolled in a two-year program could borrow subsidized Stafford loans for the equivalent of three years. In other words, if the student takes four years to complete the two-year program, he could borrow subsidized Stafford loans for any three of those four years, assuming he’s making satisfactory academic progress under the school’s standards. The period of eligibility for students attending less than full-time would be defined in regulation, which will not be subject to negotiated rulemaking. Further, a borrower who is still in school loses the interest subsidy on loans previously borrowed once the student has lost the eligibility to borrow additional subsidized Stafford loans due to the 150 percent limitation. At that point interest accrues and is treated in the same way as interest on an unsubsidized loan. The bill also takes into account and explains how to treat transfer students. This would apply to new borrowers on or after July 1, 2013.
Our understanding is that the bill also includes a provision to restore the ability-to-benefit option for students who are enrolled in adult and postsecondary education for career development for purposes of Pell Grant eligibility only. The final FY 2012 budget had eliminated ATB as a measure for all Title IV eligibility.
The bill would also amend the cost of attendance (COA) definition in the need analysis section of law, as regards distance education students. The Pell Grant COA for students who receive all of their instruction by telecommunications technology would be limited to tuition, fees, books and supplies, effective beginning with the 2012-14 award year. This restriction would not apply to other Title IV programs, thus setting up a dichotomy in COA by program.
Reducing a student’s COA for Pell Grant purposes but not for Direct Loans could actually result in shifting aid for some students from grant funding to loans.
There would be no change in COA rules for students who receive only part of their instruction via telecommunications. (Note that student who are required to be on campus for noninstructional purposes—for example, only for orientation or to take exams—would be considered to be taking all their instruction by telecommunications and would be subject to the restriction).
This provision would have an impact only if the student’s tuition, fees, books and supplies total less than the COA at which the Pell Grant Payment Schedule begins to show a reduction in award. For 2012-13, for example, the COA must be below $5,550 before Pell Grants are reduced.
The bill would not change the current provision in HEA sec. 484(l)(2) that allows aid administrators to reduce a student’s Title IV aid if they determine that distance education results in a substantially reduced cost of attendance.
The bill did not have Republican support because it finances the Affordable Care Act, but still passed due to the Democratic majority in the Senate. The House must still set spending levels for the upcoming fiscal year. Reports indicate that the House subcommittee will markup its version of the bill sometime next week with a vote the following week.
The Democratic-controlled Senate and the Republican-controlled House may find it challenging to reach an agreement on the Labor-HHS-Education spending bill. It is unlikely that there will be any agreement until after the Nov. 2012 elections. This means that Congress will likely have to pass a stop-gap spending bill (known as a continuing resolution) to fund federal programs after the end of the FY 2012 on Sept. 30.