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Category: Student Aid

The Aftermath…

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Both the House and Senate are in recess this week for the Fourth of July holiday.  Late last week, both chambers demonstrated that they can advance legislation by reauthorizing federal highway and transit programs for two years and preventing Stafford student loan interest rate increases.  Also last week, the Supreme Court upheld the Affordable Care Act (ACA). Republicans vow to continue to cut or restrict funds to implement the Act, and Democrats encouraged states to move forward on implantation. While some features of the ACA have already been adopted – no denying coverage for pre-existing conditions and adult children can remain on their parents’ plans until the age of 26 – the main feature that mandates that all Americans must purchase some form of health coverage takes effect in 2014.

But the BIG news from last week is the major storm that hit the DC area late Friday night. Winds reached 80 MPH with intense thunder and lightning, leaving massive power outages and other storm damage throughout the region – mostly downed trees and power lines. Hundreds of traffic lights are still out and a half-million homes are still without power with outages expected to continue in some areas through the end of the week. This might not be so bad if the temperature wasn’t expected to be in the 90s all week!  Federal workers have the option to take unscheduled leave due to this mess, but if I were without power I would make my way into my air conditioned office post haste!

You’ll be happy to know that the dedicated Office of Federal Relations Team made it through the storm unscathed – all our homes had power over the weekend – and we all made our way into the office this morning. Happy Monday!

Student Loans and Transportation Research

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The House and Senate both will take action today on the conference agreement to HR 4348, the Moving Ahead for Progress in the 21st Century Act (MAP-21). The agreement reauthorizes federal highway, transit, and other surface transportation programs through September 30, 2014, at current funding levels with inflationary increases for certain programs. It consolidates or eliminates dozens of programs, and streamlines environmental reviews of proposed projects to more quickly begin construction. The measure also extends for an additional year the 3.4 percent interest rate for new federally subsidized student loans (Stafford Loans), and it overhauls the federal flood insurance program to help make it actuarially sound. To cover Highway Trust Fund shortfalls, the measure transfers $21.2 billion in general fund and other monies, and offsets the costs of those transfers through changes to pension law and other provisions. The measure does not include controversial House GOP-supported provisions that would have approved the Keystone XL pipeline, or shifted regulation of coal ash from EPA to the states.

MAP-21 includes language reauthorizing the University Transportation Centers (UTCs), which conduct transportation and transit related research as well as developing the future workforce in these fields.  UW operates the UTC for USDOT Region X.  We successfully retained language in the final bills to reauthorize Regional UTCs, which were under threat of elimination in earlier iterations of the bill. Specifically, HR 4348:

  • Authorizes 5 National Centers at $3 million each; 10 Regional Centers at $2.75 million each; and 20 Tier 1 Centers at $1.5 million each.
  • Requires Tier 1 Centers to have a 50 percent match and all other Centers a 100 percent match.
  • Requires one of the regional centers to focus on “comprehensive safety” as their main research issue.
  • Requires USDOT to establish a competitive recompletion for all Centers at the same time and no later than 1 year from enactment. 

The Office of Federal Relations is discouraged to see that everyone will need to re-complete within a year as they just went through this process last fall.  And, the overall authorization is only for two years, so all of this will come up again before we know it, and may require Centers to re-compete again.

Deal Reached on Student Loans

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On Tuesday, Senate leaders announced that they reached a deal to prevent student loan interest rates from doubling from 3.4 percent to 6.8 percent, but they are still determining whether to attach that “deal” to a measure that would reauthorize highway programs, which is still being negotiated. Congress must take action on both issues – student loan interest rates and highway programs – before June 30th.

The agreement reached yesterday would use two pension-related maneuvers to offset the cost of the student loan bill, as well as a Republican proposal to reduce the amount of time that students are eligible for an in-school interest subsidy. The idea to change this eligibility had been included in the President’s FY 2013 budget request, with direction that the savings would be used to shore up a shortfall in Pell grants, a federal student aid program for low- to middle-income students.

The Office of Federal Relations is monitoring this closely as we are concerned that by taking this offset off the table, the Pell Grant program may experience a funding shortfall sooner than anticipated. It could also stymie Senate efforts to increase the annual Pell Grant award from $5,550 up to $5,635.

Very Big Week in Congress

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Today begins a very big week in Congress that could have huge consequences for the remainder of the calendar year.  First, the Supreme Court is expected to hand down its decision on the Affordable Care Act (ACA), a ruling that will likely dominate the airwaves this week.  Second, Congress must deal with two critical legislative issues this week before the June 30th deadlines:  student loan interest rates and highway funding.  If Congress does not take action by June 30th, interest rates on federal student loans will increase from 3.4 percent to 6.8 percent.  Congress also faces a deadline to reauthorize highway and transit funding, or they must enact another extension for those programs to continue (this would be the 10th extension so far).  Finally, the House is expected to vote to hold US Attorney General Eric Holder in contempt of Congress this week for failing to disclose internal Justice Department documents on how federal officials allowed guns to fall into the hands of Mexican drug cartels (the “Fast and Furious” scandal for those of you following this closely).

Both the House and Senate are in session this week and will go into recess next week for the Fourth of July holiday.

Appropriations:  The House Appropriations Committee approved three more FY 2013 spending bills last week—Agriculture, Financial Services, and Transportation-HUD—and held a subcommittee markup of its FY 2013 Interior-Environment spending bill, which funds the Environmental Protection Agency (EPA) and the US Geological Survey (USGS). The House Appropriations Committee held a subcommittee markup of the FY 2013 Interior-Environment Appropriations, which would provide $7 billion for the EPA, $1.4 billion (17%) below the FY 2012 enacted level and similar to the agency’s funding level in FY 1998. The bill also provides $967 million for the USGS, $101 million below the FY 2012 enacted level.

The full House has approved six of their FY 2013 spending bills. The full Senate, on the other hand, has yet to take up a FY 2013 spending bill and the appropriations committee has slowed its work after moving nine of its 12 bills through the process.  The Senate is not expected to take up any before next week’s Fourth of July recess.

The Supreme Court’s ruling on the ACA this week will certainly have an impact on Congress’ ongoing appropriations and budget debates. House appropriators have just one remaining measure to be unveiled — the Labor-HHS-Education bill. House leaders will almost certainly continue their attempts to “defund” the ACA when and if this measure comes up. Senate Democratic appropriators recently moved forward with their version of the FY 2013 Labor-HHS-Education bill that kept the funds intact.

Odds and Ends for the Week

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Student Loan Interest Rates:  Majority Leader Harry Reid and Minority Leader Mitch McConnell are getting close to a deal to prevent student loan rates from doubling on July 1st, from 3.4 percent up to 6.8 percent.  A deal could be announced as soon as today, although early next week seems more likely. The talks have centered on how to pay the roughly $6 billion it will cost to keep the interest rate on federal Stafford loans at 3.4 percent. Unless Congress intervenes, rates would increase to 6.8 percent starting July 1st. The list of options Reid and McConnell are considering include one favored by Reid that would tweak pension payment contributions by employers and increase premiums paid by businesses for Pension Benefit Guaranty Corp. coverage. The House will evaluate the proposal once the Senate reaches a deal, but they will not yet confirm support for Reid’s proposed pay-for.

Highway and Transit Programs:  Transportation bill conferees are getting closer to a deal on legislation to reauthorize federal highway and transit programs. Congressional staff are expected to work through the weekend to try and hammer out a final agreement. When that is completed, some conferees will get back together on Tuesday when the House returns from a long weekend away. Lawmakers are racing against the clock as the current extension expires on June 30th, the same day that Congress is expected to recess for the Fourth of July week. It is expected that staff is also drafting a 6-month extension measure in case Congressional members cannot reach agreement on the larger reauthorization bill.

End-of-Year “Fiscal Cliff”:  The cuts through sequestration are just one of a number of high-profile fiscal issues that Congress will need to address after the November election. The Bush tax rates are set to expire at the end of the year, and it’s likely that Congress will have to raise the debt ceiling again. This is the same issue that faced Congress last August that put the Budget Control Act and sequestration in place. Both Democrats and Republicans have said publicly that they want to avert the across-the-board sequestration cuts, which would hit roughly $500 billion each to defense and non-defense discretionary spending over the next decade. But the two sides have been unable to reach a deal about how to find alternative deficit reduction to replace the cuts, as Republicans are opposed to raising taxes and Democrats are hesitant to cut entitlement spending.