Policy Deep Dive: Build Better Act

By Policy & Federal Relations Team

The House Committee on Education and Labor on Wednesday formally unveiled how it plans to allocate its pot of the $3.5 trillion budget resolution, with increased funding and expanded eligibility for the Pell Grant program, grants for tuition-free community college, tuition assistance for HBCUs, MSIs, and TCUs, new retention and completion grants, and a change to PSLF eligibility for active duty members of the armed services. The committee completed its markup and voted to advance the bill on Friday, sending the measure to the House Budget Committee for the next step in the reconciliation process.

Increase to Maximum Pell Grant

The bill includes a $500 increase to the maximum Pell grant for the 2022-23 award year. The one-time $500 boost would increase the portion of the maximum grant amount that is made up of mandatory funding. Under the reconciliation proposal, the $500 increase to the mandatory portion would be maintained through award year 2029-30. Though larger than the small grant increases passed in recent years through the annual appropriations process, the $500 boost proposed for award year 2022-23 falls short of the increase included in President Biden's American Families Plan, which proposed raising the maximum award by $1,475 through an increase in mandatory funding.

NASFAA joined a group of higher education associations Thursday in sending a letter to the House Education and Labor Committee that, while praising the legislation’s substantial higher education investments, urged lawmakers to include funding to double the maximum Pell Grant award in the package. Thursday’s letter follows the July launch of #DoublePell, a national advocacy campaign to double the maximum Pell Grant being led by a coalition of more than 100 higher education associations, organizations, and advocacy groups, including NASFAA.

Separate from the increases being considered as part of the reconciliation package is the potential for additional increases to the maximum award through the annual appropriations process, which can boost the maximum grant amount through increases in discretionary funding. Both the Biden administration’s FY22 budget request released in May and the FY 2022 Labor-HHS-Education appropriations bill passed by the House in July proposed an additional $400 increase through FY22 appropriations.

Pell Eligibility for DACA Recipients

The  also proposes to expand Title IV student aid eligibility to Deferred Action for Childhood Arrivals (DACA) students, effective for the 2022-23 award year through award year 2029-30. NASFAA has long-supported protecting the DACA program and extending Pell Grant eligibility to DACA students.

The issue of expanding Pell eligibility to DACA recipients may in part depend on the actions of the Judiciary Committee, who received reconciliation instructions related to citizenship pathways for Dreamers, and could also hinge on whether Senate procedures allow for inclusion in the reconciliation package. The Senate parliamentarian was scheduled on Friday to hear arguments in support and in opposition of including immigration language in the package, and will ultimately decide whether such provisions are allowable under the so-called “Byrd Rule," which prevents any legislation from being included in a reconciliation bill that does not have a budgetary effect and is unrelated to spending or taxes.

Free Community College: America’s College Promise Program

The bill includes a proposal to make community college free beginning in the 2023-24 award year, creating federal grants that would go to states and Tribal Colleges and Universities (TCUs). For state grants, there would be no state match requirement for the first year. The state match would increase annually by 5% until it reached 20% in 2027-28. The federal share of state grants would be determined on a per-student basis, based on full-time equivalent enrollment, equal to the nationwide median community college resident tuition and fees, not weighted for enrollment, for each eligible student enrolled in community college in that state, and would be increased annually based on the lesser of the estimated Consumer Price Index (CPI) increase or 3%.

The state share would be required even in the event that the state reduced tuition and fees such that the federal share covered 100% of tuition and fees. State scholarship aid would be permitted to count toward the state share, so long as there is no net reduction in per-student revenue at community colleges in the state as compared to the preceding fiscal year, that said scholarship aid can be used for any component of the Cost of Attendance (COA), and that aid is not awarded predominantly on the basis of merit. Any funds provided by local governments for the purposes of this program may also be counted toward the state share.

As part of its application to the Department of Education (ED), states and TCUs must, among other things, include:

  • A description of how their postsecondary programs meet quality standards established by the state under the Workforce Innovation and Opportunity Act or other quality criteria;

  • An assurance that they will assist eligible students in obtaining information about and accessing federal means-tested benefit programs and similar state, tribal, and local benefit programs that can provide financial assistance for any component of the COA other than tuition and fees; and

  • As assurance that they will annually notify eligible students of their remaining eligibility under the program; and

  • An assurance that they will clearly communicate to prospective students, their families, and the general public plans to implement this program and how eligible students can attend a community college operated or controlled by the state or an eligible Tribal College or University without paying tuition and fees.

To receive the grants, states would be required to submit and implement a plan to, within three years, align high school graduation requirements with the requirements to enter credit-bearing coursework at a state community college and certify to ED at the end of three years that such alignment has been reached. 

States would also be required to submit and implement a plan to, within three years, improve transfer pathways among state institutions of higher education as a condition of receiving the grants. States must certify to ED at the end of three years that they are meeting the requirements of  the plan. The plan must:

  • Ensure that associate degrees awarded by community colleges in the state are fully transferable to, and credited as, the first 2 years of related baccalaureate programs at public institutions of higher education in the state;

  • Increase the transferability of individual courses within the certificate or  associate programs offered by community colleges in the state to related baccalaureate programs offered by institutions of higher education in such state;

  • Expand the use of reverse transfer policies; and

  • Ensure that students attending community colleges in the state have access to comprehensive counseling and supports to facilitate the process of transferring to a 4-year institution of higher education

State maintenance of effort requirements include that states must provide financial support per full-time equivalent student at a level equal to or exceeding the average amount of State fiscal support for higher education per full-time equivalent student provided for the 3 consecutive preceding fiscal years. States would also be required to continue to provide support for operating expenses to public 4-year institutions and provide support for need-based financial aid for at least the average amount it provided for the 3 consecutive fiscal years. The bill provides for relief for maintenance of effort requirements based on state unemployment rates.

TCU grants would be determined as the greater of either the nationwide median community college resident tuition and fees for each eligible student enrolled in a TCU, based on full-time equivalent (FTE) enrollment; or 100% of the amount needed to set tuition and fees to $0 for all eligible enrolled students. There is no match requirement for TCUs.

States and TCUs with excess funding would be permitted to use those funds on need-based aid for any component of the COA, to reduce unmet need at public 4-year institutions, to improve student outcomes, or to expand access to dual or concurrent enrollment or early college high school programs.

Student eligibility criteria include:

  • Enrollment as an undergraduate student in an eligible program at a community college on at least a half-time basis

  • In situations where there are different tuition charges for in-state or in-district students, the student qualifies for the in-state or in-district tuition or would qualify but for their immigration status 

  • Receipt of $0 tuition and fees for less than 6 semesters, or equivalent (not adjusted for enrollment status) under this program

  • Not enrolled in a dual or concurrent enrollment program or early college high school

  • In the case of a student who is a U.S. citizen, filing of a Free Application for Federal Student Aid (FAFSA) for the applicable award year.

States and TCUs are prohibited in the bill from imposing additional eligibility requirements on students, including requirements based on citizenship status.

Tuition Assistance for Students at HBCUs, TCUs, and MSIs

Grants would be available by application to public and 4-year nonprofit HBCUs, TCUs, and MSIs with undergraduate student bodies consisting of at least 35% low income students, beginning in the 2023-24 award year.

Institutional awards would be calculated based on the number of eligible students enrolled at the institution for a given year times the nationwide community college resident tuition and fees, and would increase annually by an amount equal to the lesser of the estimated increase in the CPI or 3%.

Institutions would be prohibited from increasing tuition and fees at a rate higher than the institution’s average increase over the preceding 5 years during their first year of participation in the grant program. They would also need to provide a commitment to maintaining, expanding, or adopting evidence-based institutional reforms or practices to improve student outcomes. Institutions would have to meet certain other conditions regarding transfer students. Those include ensuring that students attending community colleges in the state have access to counseling and tools related to transfer to the institution; that institutions have a statewide articulation agreement with state community colleges that ensure at a minimum that an associate’s degree from a community college is fully transferable to the first 2 years of a baccalaureate degree at the institution; and, for institutions that accept transfer students, a commitment to increasing transferability of individual courses offered by state community colleges to baccalaureate degrees offered by the institution.

The bill charges the Department of Education (ED) to develop a formula to adjust institutional grant amounts based on the number of students enrolled at institutions on a less than full-time basis, and to make adjustments to the grant amount—potentially in the subsequent year—based on final enrollment data for that award year.

Institutional grant recipients would be required to use funds to reduce tuition and fees by an amount equal to at least a minimum established per-student amount, which for 2023-24 is the nationwide median community college resident tuition and fees. Starting in award year 2024-25, the per-student minimum amount would be increased from the 2023-24 amount by the lesser of the estimated percentage increase to the CPI or 3%.

In the event that an institution’s tuition and fees are less than the minimum per-student amount, institutions would be required to waive all tuition and fees, and to spend remaining funds to provide financial aid to cover any COA component, which may include emergency grants.

Grant funds would only be permitted to be used to waive or reduce tuition and fees for the student’s first 60 credits, except that students would never be considered to have enrolled for more than 12 credits per semester. Institutions would also be permitted to exclude up to 15 credits that the student attempted but did not complete, if the institution determines it is in the student’s best interest.

To receive the benefits, students would have to be enrolled at least half-time and have been enrolled at the institution for fewer than 60 credits. Students must be low-income, defined as meeting the Pell grant financial eligibility criteria, regardless of Pell eligibility status. Students could not receive the benefit if they already had a baccalaureate degree or if they were a dual or concurrent enrollment student or enrolled in an early college high school program. U.S. citizens would have to have completed the FAFSA for the applicable award year. The benefit would be capped at 6 semesters or the equivalent, regardless of the student’s enrollment status. In the event that an institution lost their eligibility to participate, the student could continue to receive the benefit for the remainder of their eligibility. Finally, students would not be denied the benefit due to their citizenship or immigration status.

Investment in Historically Black Colleges & Universities, Tribally Controlled Universities, and Minority Serving Institutions

The proposal includes approximately $1.5 billion in institutional aid for Minority-Serving Institutions (MSIs) that would be available through FY 2026, including roughly $570 billion for Historically Black Colleges & Universities, $570 billion for Hispanic-Serving Institutions, HSIs, $170 billion for Tribal Colleges and Universities. The bill would provide an additional $2 billion to support research and development infrastructure at MSIs, which would remain available through FY 2028.

Retention & Completion Grants

The bill includes $9 billion for grants to states and TCUs, beginning in 2023-34 award year, to increase student retention and completion. State grants would be competitive, and priority would be given to those states that propose to use a significant portion of funds for certain evidence-based reforms and practices; to improve retention, transfer, completion and labor market outcomes for students of color, low income students, students with disabilities, students in need of remediation, first-generation college, and other underserved populations; to public institutions serving disproportionate shares of the aforementioned students. 

Funds would have to be spent on evidence-based institutional reforms or practices such as providing support services, making emergency financial aid grants, offering accelerated learning opportunities, reforming course scheduling and credit awarding, reforming remedial education, utilizing career pathways, and improving transfer pathways.

The Biden administration's American Families Plan included a similar grant program to fund evidence-based student success initiatives. The President’s proposal would have provided $62 billion over ten years, an investment supported by NASFAA.

Public Service Loan Forgiveness (PSLF) for Active Duty Deferment and Forbearance Periods

Members of the armed services who qualify for a deferment or forbearance based on their active duty status would have their deferred monthly payments counted as if they were qualifying payments made toward the 120 payments required to receive PSLF. This would apply to loans originated prior to October 1, 2030.

What’s Next

The House Committee on Education and Labor concluded its markup of the legislation on Friday, and voted to pass the measure out of committee by a vote of 28-22. The bill will now head to the House Budget Committee who, once the various House committees have marked up and reported their respective bills, will package the proposals into a one reconciliation bill. The package must then be marked up by the Budget Committee before it is considered on the House floor. 

The Senate Health, Education, Labor, and Pensions (HELP) Committee, which also received reconciliation instructions in the fiscal year 2022 budget resolution, is moving on a slower timeline. The HELP Committee has not yet released or marked up its reconciliation proposal. Although some Democrats in Congress have indicated a goal of passing the reconciliation package by October 1, there is a strong possibility that voting and resolving differences between the Senate and House versions may last well into fall.


Publication Date: 9/14/2021

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