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Category: Student Aid

Graduate and Professional Loan Subsidy Restored by House

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Yesterday, the House Education and Labor Committee passed HR 3221, Student Aid and Fiscal Responsibility Act of 2009, which was introduced last week. The legislation eliminates the Federal Family Education Loan (FFEL) program and utilizes the $87 billion saved to fund increased Pell grant levels for students (indexed to inflation plus 1%, but subject to appropriations), as well as a number of other K-12/community college/ 4 year higher education programs. A provision of the legislation, strongly opposed by the higher education community, to eliminate the graduate and professional student loan subsify was stripped from the legislation.

The Senate is expected to consider its own version of the legislation after the August congressional recess.

Student Aid and Fiscal Responsibility Act of 2009 Summary

House Budget Reconciliation Package Taking Shape

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Today, the House of Representatives will introduce a budget reconciliation package designed to achieve components of the President’s agenda. Budget reconciliation is a special procedure, not subject to a fillibuster in the Senate, that was intended to serve as a deficit reduction tool by forcing spending cuts or tax increases to meet the targets set forth at the beginning of an appropriations cycle in a budget resolution.

The legislation, The Student Aid and Fiscal Responsibility Act of 2009, advances President Obama’s goal of making the Pell Grant program an entitlement -not subject to annual appropriations debates. As has been discussed on this site, the Pell Grant entitlement would be funded by eliminating the Federal Family Education Loan program (FFEL)-which utilizes banks and guarantee agencies- in favor of the Direct Lending (DL) program. Financial institutions, Members of Congress with a heavy presence of financial institutions in their states/districts, and many conservatives have been against the elimination of the FFEL program. Just a few weeks ago, it appeared likely that a compromise would be stuck that fell short of a full Pell entitlement. However, the legislation offered today supports a Pell entitlement and a number of other student aid items.

Provisions of the bill:  Continue reading “House Budget Reconciliation Package Taking Shape”

Department of Education Revamps Student Aid Application Process

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**The following press release was made available by the Department of Education on June 24th**

The Obama Administration today announced a shorter, simpler, and more user friendly Free Application for Federal Student Aid (FAFSA) that will make it easier to apply for college financial aid. The changes—some of which are already in place while others will be phased in over the next few months—are designed to increase postsecondary enrollment, particularly among low- and middle-income students.

“President Obama has challenged the nation to once again have the highest percentage of college graduates in the world,” said Arne Duncan, U.S. Secretary of Education. “To do that, we need to make the college-going process easier and more convenient, and to send a clear message to young people as well as adults that college is within their reach. Simplifying the financial aid process is an important step toward reaching that goal.” Continue reading “Department of Education Revamps Student Aid Application Process”

CBO Analysis Dims Prospects of a Pell Entitlement

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This week, the Congressional Budget Office (CBO) released an analysis of the fiscal impact of President Obama’s FY10 Budget Request. The analysis looks at the budget request broadly, as well as focuses in on some of President Obama’s major proposals on health care and student aid.

Of particular note, CBO revised down — from $94 billion to $87 billion — an earlier estimate of the savings that would be realized from eliminating the Federal Family Education Loan Program (FFELP) in favor of the Direct Lending program. The new estimate jeopardizes the President’s proposal to use savings from FFELP to fund a Pell grant entitlement. There already appears to be little stomach in Congress for the creation of another entitlement program. House Appropriations Chairman David Obey (D-WI) has articulated that he is reluctant to create a new entitlement program while simultaneously trying to convince the American people that the majority in Congress is fiscally responsible. Nonetheless, a permanent Pell grant remains possible and at a minimum, funding recouped from the elimination of FFELP would be put towards increased Pell grant levels for students. It should be noted that the financial sector, and many in Congress, are pushing to maintain the FFELP program and the role of banks and guarantee agencies in the administration of federal student loans.

CBO: An Analysis of the President’s Budgetary Proposals for Fiscal Year 2010

Rep. McMorris Rodgers Possible Ranking Member on Education and Labor

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**UPDATE** The new Ranking Member on Education and Labor is John Kline (R-MN).

Earlier this week, it was announced that Rep. Howard P. (Buck) McKeon (R-CA), the Ranking Member on the House of Representatives Education and Labor Committee, is leaving the panel to take the same position on the House Armed Services Committee. McKeon’s departure is particularly significant because the Education and Labor Committee is considering President Obama’s proposal to eliminate the Federal Family Education Loan Program (FFELP) in favor of a direct lending program that would cut banks and guarantee agencies out of the student loan process and result in savings that would be utilized to make the Pell Grant an entitlement. Congressman McKeon has long been viewed as a defender of financial institutions. Next week, the House Republican Steering Committee will meet to chose a new Ranking Member for the Education and Labor Committee.

Representatives Cathy McMorris Rodgers (R-WA), Judy Biggert (R-IL) and John Kline (R-MN) are seen as the finalists for the Education and Labor Committee Ranking Member spot. McMorris Rogers’ position on the steering committee that will make the decision is likely to boost her chances.