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Category: Federal Agency Developments

Obama Aims to Ease Student Debt

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President Obama announced today a new executive order aimed at easing student borrowers’ debt loads by capping repayments at 10 percent of their monthly income. Obama also made student loans the focus of his weekly address on Saturday, saying he’d be taking action this week.

The executive order will expand on a 2010 law, the Bipartisan Student Loan Certainty Act, that capped borrowers’ repayment. The law left a hole in eligibility for people with older loans — anyone who borrowed before October 2007 or stopped borrowing by October 2011, which is approximately 5 million borrowers — were not eligible for the cap. The executive order will close the hole, but relief, however, would not be available until December 2015. The time is needed for the Department of  Education (ED) to propose and put new regulations into effect.

In addition, the President will announce that ED will renegotiate contracts with companies that service federal loans to give them additional financial incentives to help borrowers avoid delinquency or default.  Further, both ED and Treasury will work with the nation’s largest tax-preparation firms, H&R Block and Intuit Inc., to ensure that borrowers are aware of repayment options and tax credits for college tuition.

Finally, the President is expected to urge the swift passage of S 2292, the Bank on Students Emergency Loan Refinancing Act. The measure introduced by Senator Elizabeth Warren (D-MA) last week and has been championed by people like Senators Murray and Cantwell. The measure would would allow an estimated 25 million Americans to refinance student loans, federal and private, at lower interest rates. Reduced interest payments would cost the government about $58 billion over 10 years, according to the Congressional Budget Office, but the legislation would raise $72 billion by imposing a new tax on some high-income individuals.

Fact Sheet on the Legislation Available here.

Bill Text Available here.

The Senate is expected to consider Warren’s bill (as S 2432) this week, but the measure has little chance of consideration by the House.

Easton to leave IES

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 John Easton announced today that he will be leaving his position as Director of the Institute of Education Sciences (IES) this Fall to take a position at the Spencer Foundation in Chicago.

As director of IES, Easton oversaw the National Center for Education Statistics, the National Center for Education Evaluation and Regional Assistance, the National Center for Education Research, and the National Center for Special Education Research.

Easton was confirmed by the Senate and has served at Director of IES since May 2009. He was confirmed for a 6 year term. Prior to coming to IES, he was the executive director of the Consortium on Chicago School Research at the University of Chicago.

U.S. Department of Education Announces $75 Million First in the World Competition

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To spur innovation in higher education aimed at helping more students access and complete a college degree or credential, the U.S. Department of Education announced late last week the availability of $75 million in the First in the World (FITW) program. The grants will fund the development and testing of innovative approaches and strategies at colleges and universities that improve college attainment and make higher education more affordable for students and families. 

The FITW competition aims to increase postsecondary access, affordability, and completion for underrepresented, underprepared, or low-income students at institutions across the country. Colleges and universities are invited to submit proposals addressing key priorities around boosting enrollment and attainment for those students, or minimizing gaps between these students and their peers; improving transfer rates between community college and four-year institutions; increasing enrollment and completion rates among underrepresented, underprepared, or low-income students in Science, Technology, Engineering, and Math (STEM) programs; reducing time to completion; and/or increasing college affordability.

FITW is designed to spur a diverse array of innovative ideas and approaches in order to dramatically improve student learning and outcomes. Applications are available now and due by June 30th. All grants will be awarded by September 2014. The Department will post further information, including information about webinars and other technical assistance, on the FIPSE Web page.

ED Announces Plan College Ratings Timeframe

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Today, the Department of Education (ED) announced a timeframe for rolling out the Administration’s proposed College Ratings system. In a post by Deputy Under Secretary Jamienne Studley entitled, “Making it Easier to Pick and Pay for College through Ratings“, the Administration announced that the college ratings system will be ready this Fall and a final version will be ready before the 2015-16 school year.

You can read the post here.

Pell Grant Shortfall Delayed to FY2017

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Yesterday the Congressional Budget Office (CBO) released their Budget and Economic Outlook: 2014 to 2024. The deficit is expected to fall this year as the economy gains steam, but CBO also anticipates that increasing health care costs and higher payments on the national debt mean that those gains will not last. The deficit estimate sets the new baseline that CBO will use to assess the impact of legislative proposals this year. The agency now projects the cumulative deficit for 2014 to 2023 will total $7.3 trillion, which is about $1 trillion more than the $6.3 trillion estimate in May.

This new report provides a good analysis of Pell Grant funding. Last year we were all surprised to find a surplus in the Pell program after worrying that we would be facing a shortfall. The good news from the CBO report is that the surplus is still here and it’s trending larger. The CBO sees Pell Grant costs coming in about $1.7 billion lower than originally expected for fiscal year 2014. It also revised costs in future years lower than what it projected last year by about $1 billion a year. All of those figures assume that Congress keeps the current eligibility rules for the program, including the maximum grant, as they are today. Based on the CBO report, the Pell program may not see a shortfall until FY2017. EdCentral provides a great analysis of the Pell Grant surplus and what it means for future years.

This is good news for the Pell Grant program and the students who rely on it to fund their education. Closing the Pell shortfall has been a priority agenda item for UW for the past couple of years and we will continue to advocate for fund funding.