The Senate version of the Higher Education Act reauthorization was approved last week, which made broad student loan and grant changes, has been well received by the University administration and many student and institutional advocates.
The bill dictates federal oversight of higher education programs over the next six years, including funding for student loans and Pell grant programs.
The University was particularly pleased with adjustments to the Pell Grant program, which includes approximately 1,800 University undergrads receiving $3 million in grants, Director of Student Financial Services Yvonne Hubbard said. Changes include increasing the maximum grant by $1,050 to $5,100, raising the income cutoff for automatic eligibility to $20,000, as well permitting the year-round ability to spend Pell funds.
"We're very dependent on the Pell Grant to help attract low-income students, and as we're trying to do this it helps to have a strong Pell program," Hubbard said.
Significant changes to the Stafford Student Loan Program are also afoot, according to Bob Shireman, executive director of the Institute for College Access and Success.
The House version changes the interest rate on consolidation loans to a variable rate capped at 8.25 percent, whereas the Senate bill allows borrowers to lock in market rates for an origination fee at any time, or have a variable rate loan capped at 6.8 percent. Interest rates for Parent Loans for Undergraduate Students are expected in both versions, with the funds being used for Hurricane Katrina relief.
"The House bill goes too far in protecting the lenders and middlemen in the program and doesn't do enough to assure borrowers that the interest rates and payments won't be more than they can handle," Shireman said. "The Senate bill goes further in reducing the excess subsidies to the lenders, but raises the interest rates for parent borrowers apparently for Katrina relief. There are big picture questions about funding for the relief."
These changes are likely to have an affect on a large number of University students. Hubbard says that University students as a whole borrow almost $100 million annually, including $6.5 million in undergraduate need-based Stafford loans.
"As much as we don't want to see students borrowing, we want to give students who do borrow the opportunity to borrow more money at the lowest possible rates," Hubbard said.
The bill is headed to a conference committee, where the House committee proposal passed in July will be reconciled with the Senate markup, after the bill is approved by the Senate. Approval is expected soon after the Senate takes up legislation relating to Hurricane Katrina next week, according to Craig Orfield, spokesman for the U.S. Senate Health Education Labor and Pension Committee.
"Our staff has done a tremendous amount of pre-negotiating with the minority on the House side and the Senate side," Orfield said. "There are some points with regard to program flexibility, the continuation or extension of certain programs within the act, but I think that, because of the amount of discussion during August and the summer, we are confident we're going to get this passed."
The act ultimately will need to incorporate funding cuts of $13 billion from current federal aid higher education support, said Edward Elmendorf, a spokesman for the American Association of State Colleges and Universities.
The House needs to seek an additional $3 billion in cuts to meet this target, a proposal expected by the House committee majority today.
"We think there will be less savings coming directly from hits on the students in the Senate than in the House," Elmendorf said. "The implications on the universities have to be divided into what things in the way of discretionary spending they compete for. The majority of the cuts can only be made from the mandatory not discretionary programs. Even Pell is not a mandatory program."
University official Hubbard thought that the Senate bill represented the best compromise available between spending and restraint within the House and Senate bills.
"With all the work that they have done over the last year, the House bill is less worrisome than it was, and the Senate bill has a lot of good parts to it," Hubbard said.
The sentiment regarding the tempered Senate bill was shared by others who were concerned with the higher level of oversight allowed by the House bill. While both versions require universities publicly to report tuition and the percent of students on various forms of financial aid, the Senate version lacked a provision that would place schools that raise their tuition at more than twice the rate of inflation on a federal watch list and would subject them to an audit.
"There's much to be pleased with [about the Senate bill] and provisions for student aid that are very helpful," said Barry Toiv, a spokesman for the American Association of Universities. "As for the House bill, we are concerned about a number of provisions in the House bill that will impose a lot of costs without achieving much benefit"
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