House Introduces Package of Bipartisan Reauthorization Bills

By Megan McClean and Joan Berkes, Policy & Federal Relations Staff

Yesterday various members of the House Education and the Workforce Committee introduced a new bill to make the Pell Grant more flexible and reintroduced three bills introduced in the last Congress related to higher education affordability and transparency. The reintroduced 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” (H.R. 3177), introduced by Reps. Denny Heck (D-WA), Phil Roe (R-TN), Jared Polis (D-CO) and Mark Pocan (D-WI), 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. NASFAA has also conducted research discussing implementation issues associated with PPY.

Counseling

The “Empowering Students Through Enhanced Financial Counseling Act” (H.R. 3179), introduced by Reps. Brett Guthrie (R-KY), Rick Allen (R-GA), and Suzanne Bonamici (D-OR),  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; and
  • 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; and
  • 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.

Transparency

The “Strengthening Transparency in Higher Education Act” (H.R. 3178), introduced by Reps. Virginia Foxx (R-NC), Luke Messer (R-IN) and Gregorio Sablan (D-Northern Mariana Islands),  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;
  • Enrollment;
  • Completion rates;
  • Costs;
  • Financial aid; and
  • Cohort default rates.

The legislation would also mandate ED to include a method for users of the Dashboard to easily compare institutions.

Flexible Pell Grants

The “Flexible Pell Grant for 21st Century Students Act” (H.R. 3180), introduced by Reps. Elise Stefanik (R-NY), Carlos Curbelo (R-FL), and Ruben Hinojosa (D-TX), would permit students to receive additional Federal Pell Grant during an award year beginning on or after July 1, 2017, in order to accelerate their progress towards their program credential. Under this bill, a student could receive up to 150% of his or her Scheduled Award during an award year.

“Accelerate” would mean that the total number of credits (or equivalent) earned during the previous payment periods in the award year plus the credits in which the student enrolls during the additional payment period together exceed the number of credits in the institution’s definition of academic year for the student’s program of study. The student would be able to make up deficient credits from the prior payment periods while at the same time taking credits beyond the academic year definition.

For example, if the academic year is defined as including 30 credits, a student who earned a total of 27 credits in the fall and spring of a semester-based program could enroll in six credits in summer; three  would complete the first academic year and three would qualify the student as accelerating. This student would be paid for six credits. The payment would consist of any leftover funds from the first scheduled award (for example, the student might have attended, and been paid, on a three-quarter-time basis for one of the terms) plus whatever amount is necessary from a second award to make up the student’s full eligibility for the extra term.

If this sounds familiar, it is very like the previous incarnation of year-round Pell in 2010 and 2011, but, importantly, without the added complexity of mandatory assignment of cross-over periods. NASFAA worked at length with Hill staff to ensure that, as the bill states, the institution has discretion for assigning any cross-over period to an award year; this provision should prevent much of the confusion and burden associated with the former rules. It also allows a waiver of the acceleration requirement for a student who could not accrue the requisite number of credits due to circumstances beyond the student’s control.

Any additional Pell payment would count towards the student’s overall lifetime eligibility, and the school would have to notify the student of that fact. The institution could also offer additional counseling to the student as long as it did not impede or delay disbursement. Students would be permitted to decline the extra Pell award within a reasonable timeframe established by the institution. The bill would also require ED to explain information about remaining eligibility to the student in an annual status report and to provide a calculator that the student may use to determine remaining eligibility.

It is unlikely that these bills will see any immediate movement as Congress will recess for the month of August. It is possible that reauthorization will see some additional movement later this fall.

 

Publication Date: 7/24/2015


Courtney G | 7/25/2015 10:13:09 AM

My first thought regarding using PPY was also how it will effect income reductions. Right now, we update the prior year tax info to whatever the parent or student is estimating for the current year. How would it work if PPY is being reported?
Don't really understand the need for Pell counseling...

David S | 7/24/2015 1:48:48 PM

All Pell Grant recipients would be instructed to, in so many words, go see the Financial Aid Office if you want more money? No room for misinterpretation there…"I got an email from FAFSA that said you'd give me more money if I asked." ED, trust us, students come to us for more money already, they don't need prompting.

This is all a start, they're showing some progress, and that's a good thing (although the Navigator/Dashboard thing sounds like nothing more than a name change to me). The Pell counseling includes describing worst case scenarios that the student will never remember if things come to that later, so I don't see the point. But it does include one aspect of financial literacy (budgeting) reduced to a bullet point…as someone who works only with grad students, I can confirm that the need for that is not confined to Pell recipients.

Tracy H | 7/24/2015 1:18:13 PM

I think moving to PPY is moving in the right direction...however, I think it might be a challenge and possibly an implementation nightmare if enough resources and support aren't provided to ED and schools. And, I understand the price for PPY is hard to overcome. And I also wonder why very few people talk about the possible increase in professional judgments that may result from PPY. Income for families don't remain the same for one year...let a lot two!
Please don't over-regulate the proposed Year Round Pell program.
While I understand the premise and motivation behind annual counseling, I really struggle with how many requirements we have for students to complete before they receive their aid. Over time they get so frustrated that they end up not reading anything (let alone retaining it) and just get through it on the computer screen in order to get the money!

Douglas L | 7/24/2015 1:0:11 PM

Ted - I'm hopeful that "signing a statement" would mean/allow electronic. Although with the Feds, you never know - it could even mean in-person, like the Statement of Educational Purpose...ugh!!!!!

Marc A | 7/24/2015 12:38:19 PM

I am completely supportive of PPY, but I think it would be interesting to compare how many colleges use CSS PROFILE prior to and after implementation. If many more schools need the additional information from CSS to award institutional aid, this is a net loss for students applying for aid in my opinion.

Question: Would institutional awarding methodologies change?
Response: Similar to the potential changes to the mechanism for determining awards of state funding as a result of PPY implementation, consideration should be made by individual institutions in their methodology for determining eligibility and award amounts for institutional funds. Regardless of whether they make use of an alternative need analysis application or maintain their own mechanism for awarding institutional aid, both the approach and the tools used will need to be taken into
account in light of changes to the FAFSA data using PPY

Tony L | 7/24/2015 10:16:19 AM

I am encouraged that some of the proposed bills streamline our processes (PPY, for example), but am discouraged by yet MORE requirements that we as FA Administrators must comply. I would reiterate to Congress that they must STOP over-regulating (adding ANNUAL counseling for loan recipients and now adding counseling for Pell Grant recipients...c'mon really?) our industry so that we can do our jobs effectively.

Patrick M | 7/24/2015 9:43:17 AM

No mention of the Federal Perkins Loan Program?

Theodore M | 7/24/2015 8:44:25 AM

I am all for active confirmation but I am concerned about "signing a statement accepting the loan." Please make sure they know signing a piece of paper is so last millennium.

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