Yesterday, House Education Chairman George Miller (D-CA) released the Student Aid and Fiscal Responsibility Act of 2009 (HR 3221), budget legislation that would make drastic changes to several Title IV programs.

"Today, we're taking the first step on President Obama's third major domestic priority," said Miller in a press statement yesterday. "We are making the single largest investment in higher education ever and expanding high-quality educational opportunities to all Americans, from ‘cradle to career.'"

But not everyone is pleased with the legislative proposal. The newly appointed ranking member of the House Education Committee also released a press statement blasting Democrats for eliminating the FFEL program. "Is there any industry the Democrats aren't planning to take over?" asked Ranking Member John Kline (R-MN).

President Obama also joined the fray, applauding Miller for "introducing an education reform bill that will cut giveaways to special interests, invest in our children's future, and save taxpayer's money."

The bill is scheduled for mark-up next week by the House Education Committee, but has a long way before becoming law. The Senate must take up similar legislation and won't likely do so until after the August recess. Even after the Senate passes a budget bill, it will need to be reconciled with the House before the President can sign it into law.

NASFAA has provided the following preliminary summary of some of the Title IV provisions in the bill. NASFAA staff will be conducting a comprehensive review of the legislation in the coming days and will release them to members in the near future.

Pell Grants

The bill would continue the trend set forth by the College Cost Reduction and Access Act by dividing the Pell Grant into mandatory and appropriated funding. Beginning in the 2011-2012 award year, the mandatory portion of the Pell Grant would be indexed to the Consumer Price Index plus 1 percent.

The mandatory portion of the Pell Grant is $490 of the $5350 maximum award for 2009-10. For 2010-11, that mandatory portion is scheduled to increase to $690, raising the maximum award to $5550. Barring any further changes, it is this $690 portion that would be increased by CPI + 1 percent.

College Access and Completion Fund

The bill authorizes and appropriates $600 million each year from fiscal years 2010 to 2014 for a "College Access and Completion Fund" to:

• "promote innovation in postsecondary education practices and policies by institutions of higher education, States, and nonprofit organizations to improve student success, completion, and post-completion employment, particularly for students from groups that are underrepresented in postsecondary education; and

• "to assist States in developing longitudinal data systems, common metrics, and reporting systems to enhance the quality and availability of information about student success, completion, and post completion employment."

The funds appropriated for this fund would be divided between four specific purposes as follows:

• Fifty percent (50%) for "State Innovation Completion Grants" (Section 782): Matching grants to be made available to States on a competitive basis to promote student persistence in, and completion of, postsecondary education.

• Twenty five percent (25%) for "College Access Challenge Grants" (Section 781)

• Twenty four percent (24%) will be made available to "Innovation in College Access and Completion National Activities" (Section 783), where grants of at least $1 million will be awarded on a competitive basis, to colleges, nonprofits, philanthropic organizations, and other qualified organizations to conduct innovative programs that advance knowledge about, and adoption of, policies and practices that increase the number of individuals with postsecondary degrees or certificates.

• One percent (1%) for the Director of the Institute of Education Sciences to conduct a rigorous evaluation of the programs funded under the Access and Completion Fund (section 784).

Historically Black Colleges and Universities

Invests $1.2 billion in Historically Black Colleges and Universities and Minority-Serving Institutions - including Hispanic-serving Institutions (HSIs) to provide students with the support they need to stay in school and graduate; and more.

Asset Caps for Need-Based Aid

Beginning on July 1, 2011, the bill would impose asset caps of $150,000 that would prohibit students from receiving any need-based grant, loan, or work assistance. For each award year after 2011-2012, the Secretary would be required to publish revised net asset caps that would be determined by increasing the dollar amounts by a percentage equal to the estimated percentage change in the Consumer Price Index.

The proposed legislation would also eliminate several asset-related questions from the FAFSA.

Drug-Related Offenses

The bill would prohibit students from receiving Title IV aid if they had been convicted of selling a controlled substance while they were receiving any grant, loan, or work assistance money. For a first offense, the period of ineligibility would be two years. For a second offense, the period of ineligibility would be indefinite.

A similar provision already exists in the HEA, but includes possession as well as sale, albeit with a different penalty structure.

Student Loan Program Changes

• The bill would end the Federal Family Education Loan Program on June 30, 2010 unless continuation is expressly authorized by Congress through additional legislation.

• The bill would eliminate subsidized Stafford loans to graduate and professional students after July 1, 2015.

• The bill would make interest rates on Stafford loans disbursed after July 1, 2012 equal to the bond equivalent rate of 91-day Treasury bills auctioned at the final auction held prior to such June 1; plus 2.3 percent for the next year not to exceed 6.8 percent.

• Schools located outside of the U.S. would be able to receive federal student loans through a financial institution that would act as an agent for the Secretary to receive the disbursed funds and transfer those funds directly to an institution through the Direct Loan program.

• The bill would require the Secretary - when "practicable" - to award multiple servicing contracts on federal loans through a competitive bidding process that will take into account price, servicing capacity, and capability of the servicer to provide default aversion and outreach services. These entities may include not-for-profit servicers and State agencies. The bill would require the Secretary to give special consideration to State agencies with a history of "high quality performance and demonstrated integrity in conducting operations with institution of higher education."

Posted 07/16/09 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web site questions or comments to Web@NASFAA.org.