Never the standard of self-discipline, it appears Congress will extend the deadline it set for itself to report student aid and healthcare reform bills out of committee. In April, Congress passed its 2010 budget resolution that required the House and Senate education committees to report a reconciliation bill with at least $1 billion in savings by Oct. 15. But since Congress makes the rules, they can also change the rules.
The Senate Health, Education, Labor, and Pensions Committee (HELP) will likely miss that deadline and will be seeking an extension from the Senate Budget Committee to take up student aid reform in November. If Senate Democrats cannot garner enough support for a filibuster-proof majority to pass healthcare reform, they will likely use budget reconciliation procedures to combine it with education legislation to pass one bill.
The budget resolution does not explicitly allow any waivers of the Oct. 15 deadline, but Senate Budget Chairman Kent Conrad (D-ND) told Congressional Quarterly that he does not expect delaying the student loan overhaul bill to be a problem.
The House passed its student aid reform bill - the Student Aid and Fiscal Responsibility Act - in September. The bill would eliminate the Federal Family Education Loan Program (FFELP) and redirect those savings to increasing the Pell Grant and funding multiple other K-12 and postsecondary education programs. The bill would also replace the current Federal Perkins Loan Program with a new Federal Direct Perkins Loan Program. The Senate bill will likely carry similar provisions and early drafts show that Democrat leaders are committed to paying for aid increases by eliminating FFELP.
Using budget reconciliation introduces additional complexities into the legislative process. A long-standing Senate rule (the Byrd Rule) could be invoked by Republicans to prohibit the consideration of "extraneous matter" as part of a reconciliation bill. If Republican leaders use the Byrd Rule it could hamper Democrats’ ability to create and fund all of the programs and provisions they would like included in the bill. How extraneous matter would be defined in the bill remains unknown.
All of this means that a final bill may not be ready or signed until November or December. That would leave an estimated 3,100 schools currently in the FFEL program six months to convert into the Direct Loan program. Even if the Democrats’ bid to eliminate FFELP by passing a bill is unsuccessful, they may still be able to accomplish their goal by not extending the Ensuring Continued Access to Student Loans Act (ECASLA). It is unknown how many FFELP lenders will be able raise capital for new loans when the Department of Education’s authority to purchase FFELP loans under the ECASLA expires in July 2010. Additional legislation is required to extend ECASLA, and Democrat leaders have said they will not pass such legislation.
Given the short time period that institutions have to prepare, NASFAA has urged lawmakers to provide a "safety net" for schools that are unable to transition by the July 1 date, but Democrat leaders have not been receptive to providing a FFELP extension for institutions that have difficulty transitioning to Direct Loans. NASFAA is also advocating a delayed implementation of several other HEOA and financial aid provisions to provide some administrative relief to institutions. However, the best way for schools to ensure their students have access to student loans is to prepare today - even if it may not be needed - to make loans through the Direct Loan program.
The first steps in this process would be for schools to check their Eligibility and Certification Approval Report (ECAR) to be sure they are approved to participate in the Direct Loan Program. Most schools are now set up to participate in the Direct Loan Program. A full list of transition preparation tips is available online. These steps in no way obligate institutions to participate in the Direct Loan program, but are important steps in ensuring your students do not experience any disruptions if the Direct Loan program proposals come to pass in the 2010-11 year.
Posted 10/08/09 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web site questions or comments to Web@NASFAA.org.
