House Democrats Release Higher Education Act Reauthorization Legislation

House Education Committee Chairman George Miller (D-CA) and Higher Education, Lifelong Learning and Competitiveness Subcommittee Chair Ruben Hinojosa (D-TX) released the College Opportunity and Affordability Act of 2007 (H.R. 4137) this afternoon to reauthorize the Higher Education Act (HEA).

The bill makes several changes to federal student aid programs and focuses on "creating a fairer and more easy-to-navigate higher education system and expanding college access for all qualified students," according to Miller's press release.

The introduction of the House HEA bill is a significant step towards HEA Reauthorization this year, but there is still a ways to go, and it is likely that the bill will be changed before the process is completed. The bill is scheduled for mark-up on Wednesday when House Education and Labor Committee members will amend the it. House members will likely have another chance to amend the bill when the full House considers the legislation. Then the House-passed version of the bill must be reconciled with the Senate's HEA reauthorization bill that was passed in July.

Among other changes, the bill would:

Lender-College Relationships

Require schools using preferred lenders lists to disclose to students and parents why they choose each lender on their preferred list and a notice informing them of their right to choose loan providers not included on the list. Schools would be prohibited from delaying loan certifications from lenders not on a school’s preferred lender list. Federal student loan preferred lender lists would need to consist of three unaffiliated lenders while private lender lists would need to consist of only two unaffiliated lenders. Additionally the Department would be required to maintain a list of lenders that are affiliated with one another to be given to schools to assist them in developing their preferred lender lists.
Prohibit lenders on an institution's private loan preferred lender list from originating a loan until the institution has informed students about their eligibility for federal loans. The legislation would also prohibit lenders from using an institution's name or logo in a way that implies institutional endorsement.
Require institutions to develop codes of conduct to eliminate any conflicts of interest.
Prohibit gifts from lenders and other entities in the student loan industry to financial aid administrators or other institution employees that deal with student loans. The proposed legislation would also eliminate revenue sharing and consulting (including call centers staffed by lender employees) arrangements between lenders and institutions and opportunity loans provided in exchange for federal loan benefits to the lender.
Prohibit financial aid administrators from serving on lender advisory boards.
Require annual compliance training for college employees.

Student Loans

Authorize a study of establishing a National Electronic Student Loan Marketplace for federal and private loans. The proposed marketplace would require lenders to provide advertised rates to borrowers and allow financial aid administrators and borrowers to comment about the quality of lenders' products and services. This marketplace would be similar to current student loan tools developed by private companies and would match students with loan products.
Require lenders and other lending entities to provide loan information about alumni to institutions to prevent student loan default.
Require consolidation loan providers to show how and why borrowers may lose certain loan benefits by consolidating.
Provide $2,000 a year for five years in loan forgiveness to those with careers in areas of national need, including:
- early childhood educators
- nurses
- foreign language specialists
- librarians
- highly qualified teachers
- child welfare workers
- speech-language pathologists
- national service
- school counselors
- public sector employees (police, fire, law enforcement, public safety, emergency management, public health, public interest legal services)
- nutritional professionals
- medical specialists
- mental health professionals
Members of congress would be excluded from public service loan forgiveness.
Make nurses and other health care practitioners (not just doctors) working at licensed/regulated childcare, Head Start, and state-funded prekindergarten eligible for public service loan forgiveness.
Provide $10,000 a year for up to six years in loan repayment for prosecutors and public defenders who promise to work in their field for at least three years.
Prevent penalty fees for prepayment on private loans.
Require an evaluation of the pilot loan auction program.
Make the Truth in Lending Act apply to all private education loans.
Create a 30-day lock on interest rates and fees and a three-day remorse period for private loans wherein borrowers could back out of the loan.
Require private loan providers to notify institutions about private education loans before disbursing funds.

Grants

Increase the authorized Pell Grant maximum level to $9,000 (the actual Pell Grant maximum would continue to be set annually through the appropriations process).

Provide year-round Pell Grants beginning July 1, 2009.

Allow less than full-time students to be eligible for ACG/SMART Grant awards.

Increase SEOG, Federal Work Study and Perkins allowances for books and supplies to $600, up from $450

Create a $5,000 a year scholarship program for family members of veterans and members of the military.

Create the Patsy T. Mink Fellowship Program for highly qualified minorities and women in masters and doctoral degree programs in academic areas where women and minorities are underrepresented among college faculty.

College Costs

Require states to provide a minimum amount of financial support for higher education (more than the five-year average except under exceptional circumstances). The federal government would be able to withhold LEAP funding for states that do not provide the minimum financial support for public institutions.
Create a Higher Education Price Index (HEPI) and place colleges that increase their tuition and fees at a higher rate than the HEPI on a watch list. Colleges that increase tuition and fees at a rate less than or equal to the HEPI would receive federal grants to use for need-based grants. Colleges on the watch list would be required to establish a quality-efficiency task force to review the reasons for the increase. Lower-costing colleges that raise tuition and fees less than $500 would be exempt from this provision.
Require colleges to provide a net-price calculator to inform families about the average net-cost for each income quartile.
Require colleges to clearly provide the cost of textbooks for each course.

Perkins Loans

Increase Perkins Loan annual limits from $4,000 to $5,500 for undergraduates and $6,000 to $8,000 for graduate students. Aggregate limits would increase from $20,000 to $27,500 for undergraduate students who have completed two years of a bachelor's degree, from $40,000 to $60,000 for graduate students, and from $8,000 to $11,000 for other students. The legislation would also allow loan rehabilitation after nine months of on-time payments (down from 12).

Make full-time firefighters, full-time faculty at Tribal Colleges and Universities, librarians in areas of national need and full-time speech therapists eligible for Perkins loan cancellation.

FAFSA

Require the Department to work with the IRS to get income information from the IRS to simplify the FAFSA process.

Require that the student aid application process be made simpler through the creation of an EZ FAFSA for low income students. The legislation also seeks to reduce the number of data elements on the FAFSA by 50 percent and would require the Secretary to report on the progress of that goal within two years. Students would be permitted to submit the FAFSA before October 15 of the year before they enroll.

The Department would also be required to prepare a report on the "adequacy of the financial aid forms provided by the institutions to students and parents" to ensure they include certain information such as a student's cost of attendance, gift aid, loans, and other information required by the Department. The Department must also provide a "model format" for financial aid forms that schools could emulate.

Additional Study and Research

Require the Advisory Committee on Student Financial Assistance to look into early awareness programs and public-private partnerships that increase college awareness and the amount of need-based aid available to low and moderate income students.
Require a study of how considering nonindividual factors (such as cohort default rate, accreditation, graduation rate) impact borrowers in the private loan underwriting process.

Media Coverage

Finaid.org Summary
Cost Of College A Bipartisan Concern (Inside Higher Ed)
House Bill For Renewing Higher Education Act Includes New Accountability And Antipiracy Provisions (The Chronicle of Higher Education) A paid subscription may be required.

By Justin Draeger and Haley Chitty NASFAA Assistant Directors for Communications

Posted 11/09/07 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web Site questions or comments to Web@NASFAA.org.