Senate HELP Committee Introduces Final Higher Education Affordability Act Reauthorization Bill

 Reauthorization - Masthead  

By NASFAA Policy & Federal Relations Staff 

Yesterday Chairman of the Senate Committee on Health, Education, Labor and Pensions (HELP), Senator Tom Harkin (D-IA), introduced a comprehensive Higher Education Act reauthorization bill. The Higher Education Affordability Act (HEAA) was originally released in the form of a discussion draft in late June and includes several provisions for which NASFAA has been advocating, including using prior-prior year (PPY) income in need analysis, reinstating year-round Pell, and revising the campus-based aid allocation formula. It marks the HELP Committee’s first official step toward reauthorization and focuses on four major themes and goals:

  • Increasing college affordability; 
  • Helping struggling borrowers; 
  • Strengthening accountability; and 
  • Improving transparency. 

Provisions related to college affordability: 

  • Reinstate the year-round Pell Grant while giving the institution the ability to determine the award-year assignment of crossover periods 
  • Eliminate the origination fees on Federal Direct student loans 
  • Continue and strength the campus-based aid programs
  • Create several partnerships in order to encourage collaboration between the state and federal governments and community colleges and industries 
  • Foster dual enrollment and early college high school programs in order to allow students to begin obtaining college credit prior to postsecondary enrollment 
  • Create a new Pell bonus demonstration project to incentivize institutions to enroll and graduate low and moderate-income students

Provisions related to student loans and indebtedness:

  • Streamline repayment programs into one single income-based repayment (IBR) option while maintaining a 10-year repayment option; borrowers who are at least 150 days delinquent would automatically be placed into IBR 
  • Allow private loans to be discharged in bankruptcy 
  • Strengthen loan servicing standards and reform collections processes to reduce existing harmful fees  
  • Require mandatory school certification of private student loans and the inclusion of private student loans and loans made under Titles VII and VIII of the Public Health Service Act in the National Student Loan Data System (NSLDS) 

Provisions related to institutional accountability:

  • Institute two loan repayment rates, an institutional loan repayment rate and an individual borrower repayment rate, to be used for disclosure purposes only 
  • Establish a “risk-sharing” commission to explore ways in which low-performing institutions could be held financially responsible for poor outcomes 
  • Change the current 90-10 rule for for-profit institutions to 85-15 
  • Specify that incentive compensation rules apply to all employees at an institution 
  • Develop a federal student complaint system to help students find relief and to track harmful practices 
  • Prohibit schools from spending federal education dollars on advertising and marketing 

Provisions related to transparency: 

  • Provide early notification of potential financial aid awards to middle and high school students and families  
  • Utilize prior-prior year (PPY) in need analysis so that students may apply for financial aid earlier 
  • Create a federal student unit record system, so policymakers and families can have a more accurate picture of how schools are performing related to access, persistence, and completion
  • Provide better information to student and parents up front, including debt-to-earnings ratios 
  • Mandate a standardized financial aid award letter 
  • Strengthen entrance and exit loan counseling 

Significant Changes in the Final HEAA

After submission of public comments on the draft bill, including NASFAA’s, the final bill reflects the following significant changes and additions from the original draft:

  • Authorization for a multi-year FAFSA pilot program 
  • Implementation of a student unit record data system 
  • Inclusion of part-time enrollment in year-round Pell Grant eligibility
  • Increase in the campus-based institutional match requirements
  • Revision of the campus-based allocation formulas, including a phase-out of the base guarantee
  • Pell bonus demonstration project to incentivize institutions to enroll and graduate low and moderate-income students

The HEAA includes many issues NASFAA has been advocating for, including reinstatement of year-round Pell, a move to PPY income, a phase-out of the base guarantee in the campus-based aid allocation formula, the ability for private loans to be discharged in bankruptcy, early notification of financial aid awards, and mandatory school certification of private loans.  Details on new provisions of the bill are included below. For details on provisions that first appeared in the draft bill, see NASFAA’s coverage of the draft bill.

Multi-Year FAFSA Pilot Program

The Department of Education (ED) would be authorized to implement a pilot program in five states, whereby a FAFSA application would be valid for two to four years, according to the official length of the student’s program. The need analysis would be based on a multi-year average income from the 2-3 most recent tax years and participation in the pilot would be optional for students.

Student Unit Record

The HEAA would require implementation of a student unit record data system that will collect all current data required by the Integrated Postsecondary Education Data System (IPEDS), including data on fall enrollment, 12-month enrollment, completions, student financial aid and net price, graduation rates, student charges portions of IPEDS, and portions of IPEDS relating to admissions, test scores, and institutional characteristics surveys, and other surveys, as determined by ED. ED will aggregate the data received and report it publicly at the institutional, program-specific, and State-specific  levels.

Year-Round Pell Grant

The Harkin bill would expand Pell Grant to a year-round entitlement for students who have exhausted their annual award but are enrolled at least half-time in additional payment periods within the same award year. A student could receive up to 150% of his or her annual award in that case. 

The additional Pell award would count towards the lifetime eligibility limit; this provision would simply allow a student who is accelerating his or her degree program to likewise accelerate use of Pell Grant within the LEU constraints.

The earlier draft bill released this past summer would have required full-time enrollment for accelerated Pell usage. NASFAA advocated for part-time enrollment in the additional payment periods to accommodate common summer enrollment patterns.

The bill would also direct ED to allow the school to determine the assignment of payment periods that cross over July 1 (and therefore could fall into either award year). In our advocacy efforts, NASFAA has been requesting that any reinstatement of year-round Pell include a provision that avoids the added complication of mandated assignment of summer cross-over periods.

The bill specifies the purpose of this provision as allowing a student to “accelerate the time needed to earn a degree.” That would appear to limit year-round Pell to degree programs. It is not clear whether ED could regulate the meaning of “accelerate” beyond what the bill describes. 

It is also not clear how a payment period in which a student has partial remaining eligibility would be treated. The bill would allow extra Pell awards to a student who “has received a Federal Pell Grant for an award year and is enrolled in a program of study for one or more additional payment periods during the same award year that are not otherwise covered by the student’s Federal Pell Grant.”

If a student began the award year with the summer term and only used a half-time Pell award, then attended full-time in the fall, he would have a half-time award left for the spring. If he enrolled full-time, it is not clear whether the school would be able to pay a full-time award by “topping off” the remaining eligibility from the annual award with the additional funds.

Pell Notification Requirement

Unchanged from last summer’s draft bill is a requirement that institutions periodically notify Pell Grant recipients of their remaining eligibility.

College Opportunity and Graduation Bonus Demonstration Program

The revised bill authorizes a demonstration program that would reward institutions for enrolling low- and moderate-income students and graduating them on time (that is, within 100 percent of program length based on full-time enrollment status). Eligible institutions would be granted funds to facilitate increased college access and success by:

  • Awarding additional need-based financial aid;
  • Enhancing academic and student support services;
  • Improving student learning and other outcomes while reducing costs;
  • Using technology to scale and enhance improvements; and
  • Establishing or expanding accelerated learning opportunities.

The demonstration program would be limited to institutions within five states chosen by ED based on a strong record of supporting, reforming, and improving the performance of the state’s public higher education systems to make college more affordable and increase college access and success, especially for low-income students. Among the factors considered would be a significant investment in higher education, including need-based allocation of state aid, that results in a lower net price for low-income students than in other states, and policies that ensure seamless transitions for students, such as dual enrollment and guaranteed credit transfers.

Institutional eligibility would be based on:

  • The percentage of the institution’s graduating class that is comprised of Pell Grant recipients;
  • The institution’s graduation rate;
  • The institution’s average net price; and
  • Other criteria determined by ED.

The amount of an institution’s grant under the demonstration program would depend on the number of Pell Grant recipients who graduated on time in the previous academic year. The base per-student amount would vary by type of institution (e.g., 2-year versus 4-year). The institution’s funding would increase by a bonus based on the number of students graduated by the institution above a threshold established by ED. Institutions would be required to use these funds to supplement, not supplant, state and institutional spending.

Campus-Based Programs Institutional Share

The Harkin bill would increase the general institutional share of FSEOG and FWS awards from 25 percent to 50 percent. For the Perkins Loan Program, the institutional match would increase from one-third of any FCC received to 50 percent. The Perkins program would be reauthorized. (This would not necessarily guarantee, however, that the program would once again receive funding in the annual appropriations process.)

Campus-Based Allocation Formulas

The allocation formula for each of the campus-based programs (by which monies appropriated annually by Congress are distributed among institutions participating in the program) would be reformed by the Harkin bill. Currently, an institution that began participation in a given program prior to 2000 is guaranteed 100 percent of the amount it had received for fiscal year 1999. This “base guarantee” for institutions that began participation after 1999 depends on how long the institution has participated but is generally 90 percent of its previous allocation subject to other factors.

If Congress has allocated more funds than it takes to meet the based guarantee for all participating schools, the balance is allocated according to a complex statutory “fair share” formula that computes the collective “need” of the institution’s eligible students, taking into account the institution’s cost of attendance and the number of students who fall into certain income ranges (hence the income grid schools submit as part of the FISAP).

The Harkin bill would phase out the base guarantee by allocating at least 90 percent but no more than 110 percent of the amount the institution received in the in the previous fiscal year. Newly participating schools would receive an amount based on fair share.

The bill would direct ED to establish a revised method for determining the need of an institution’s eligible students, taking into account the number of low- and moderate-income students that the institution serves. ED would have to promulgate that method within one year of the bill’s enactment.

NASFAA has advocated for many years a re-examination of the campus-based allocation formula that would result in a distribution of funds based on where the neediest students attend. NASFAA’s 2012 Reauthorization Task Force stated its belief that “the current allocation formulas are inequitable due to the fact that, over time, the campus-based funding formula has not been adjusted to reflect the demographic redistribution of needy students that has occurred across the nation.” 

In October 2013, NASFAA's Board of Directors created a new task force to continue the work of making the allocation formula more accurate and equitable and to reflect the comparative extent of the need of the student populations across institutions. Task force members also evaluated the efficacy of current reallocation rules and examined ways to provide new school participants a fairer chance to obtain funding. Among the recommendations in the task force's report is the elimination of the base guarantee under a phase-in protection so that no institution has a decrease or increase of more than 10 percent per year. As noted above, the Harkin bill includes this particular provision.

The HEAA is unlikely to see any real movement on the Hill, but its ideas and reforms serve as an important marker for upcoming reauthorization discussions. “College affordability, skyrocketing student debt, accountability, and transparency—these are all very high-stakes issues for students and families,” said Chairman Harkin in a fact sheet about the bill. “The Higher Education Affordability Act seeks changes to our system of higher education in order to make a college education more affordable and accessible.”

 

Publication Date: 11/21/2014


Daniel S | 11/21/2014 12:56:45 PM

SAVING THE PERKINS LOAN PROGRAM is a must as we all should endeavor not to throw the baby out with the bathwater! Lets improve what works!!

PERKINS has proven to be a viable program since inception. It requires buy in from schools, is need based, has numerous cancellation privileges for national needs and concerns(i.e., teachers, law enforcement and corrections officers, child family services, nursing and medical technicians pre-K and childcare service, public defender, firefighter, librarian, tribal college or university faculty service, speech language pathology, surviving spouse of public service 9-11 victims, VA disability and more!)

IF programs that don't work well (i.e. TEACH GRANT) are allowed to continue while PERKINS sunsets, then access and public service will be severely curtailed.

Perhaps NASFAA needs to better educate ALL parties about the VALUE of Perkins so it doesnt become a bi-partisan political casualty. Please sign petitions, write letters and wear your SAVE PERKINS button proudly or make one to wear at the upcoming FSA conference!

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