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Business Officer Magazine

Capitol Report

Coverage of legislation and regulatory activity that affects higher education

By Matt Hamill, Anne Gross

On Capitol Hill, New Leadership Charts Divergent Agendas

The 112th Congress convened early last month and wasted no time in revealing the fault lines that will influence legislative action in the months to come. Among early actions taken in the House were the approval of a bill to repeal last year's health-care reform bill, and a new set of internal rules that will shape future budget battles. (See figure for the changes in House committee leadership that will influence the legislative agenda.)

Action in the Senate has been focused on proposals to modify the internal rules governing filibusters.

Rules and Provisions

Among the rule changes adopted in the House are new provisions to require that increases in domestic discretionary spending accounts be offset with equivalent spending reductions in other accounts. Referred to as "cut as you go," this rule replaces a pay-as-you-go requirement stipulating that increases in mandatory spending programs (entitlements) and any tax cuts had to be offset with decreases in mandatory spending or tax increases. The rule changes are intended to make spending increases more difficult and simplify the process of making tax law changes. However, these rules guide only actions taken in the House; no similar changes or provisions have been adopted in the Senate.

While the vote on health-care reform was widely anticipated—and the ultimate failure of the repeal legislation is not in doubt—it is less clear how the new Congress might proceed with attempts to modify the health-care law. That debate is expected to continue throughout 2011.

Debt Ceiling, Finance Reform

Looming larger on the horizon are upcoming votes to increase the federal debt ceiling, which Treasury Secretary Geithner forecasts will likely be reached sometime between March 31 and May 15. Another rule change made last month in the House will now require a direct vote on the legislation, replacing a prior rule that allowed for automatic passage of a debt ceiling increase once certain procedural steps were followed.

Congress is also likely to attempt to make changes to the Dodd-Frank financial markets reform legislation adopted last year. One strategy under consideration is to limit funding for the agencies tasked with developing regulations to implement the law, and constrain their ability to hire staff to monitor compliance with those rules.

NACUBO CONTACT Matt Hamill, senior vice president, advocacy and issue analysis, 202.861.2529  

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What's Ahead?

Turning to higher education, a number of changes are coming in 2011, including some relative to the following:

Student aid programs. The authority to issue grants under two relatively new student aid programs expires on June 30. Academic year 2010–11 is scheduled to be the final year of the Academic Competitiveness Grant and the National Science and Mathematics Access to Retain Talent Grant programs, which expire and do not appear to have the support necessary to be extended. These programs, added in a rushed and somewhat haphazard fashion to the Higher Education Reconciliation Act of 2005, were difficult to efficiently administer, both by campus officials and the Department of Education.

Cost watch lists. Appearing for the first time this summer will be new college-cost watch lists posted on the Department of Education's College Navigator Web site. These lists are expected to be released on or about July 1 and reflect the reporting mandate included in the Higher Education Opportunity Act. Attention will be focused on institutions with tuition increases that rank in the top 5 percent of those for their institution type over the past three years. Also, colleges and universities are required to have a net-price calculator on their respective Web sites by October 2011.

Gainful employment. The Department of Education is expected to finalize its gainful employment regulations during the first quarter of 2011. These rules, aimed at programs that may leave students with high levels of debt and insufficient income with which to repay the debt, have generated significant controversy. Incoming House leaders have indicated that they are considering trying to block these rules.

NACUBO CONTACT Matt Hamill, senior vice president, advocacy and issue analysis, 202.861.2529  

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Improvements Enacted for Post-9/11 GI Bill

President Obama signed the Post-9/11 Veterans Educational Assistance Improvements Act on January 4, after the bill attracted almost unanimous support in Congress during December's lame-duck session. Most of the changes are scheduled to take effect on August 1—the start of the academic year for the Department of Veterans Affairs (VA)—or, for some of the changes that have budgetary impact, on October 1, the start of the next federal fiscal year.

While most of the changes are indeed improvements, a few could result in a reduction of certain benefits. Caps on tuition and fee benefits paid to eligible veterans and other qualified recipients will no longer be determined on a state-by-state basis. Instead, veterans attending public institutions will be eligible for the full amount of in-state charges for their educational program (if their service qualifies them for 100 percent benefits). Current rules limit the amount to the highest undergraduate in-state charges, so veterans attending more expensive graduate and professional programs are likely to see their benefits increased.

Benefits for veterans attending nonprofit and for-profit institutions will be subject to a national cap set at $17,500 per academic year and indexed in future years. Now, tuition and fee payments are tied to the highest in-state charges for an undergraduate at public colleges or universities in each state. Because of different pricing policies among states and expensive specialty programs offered by some public institutions, benefits caps vary widely.

In addition to changes in the cap on benefits, the legislation makes a number of other changes to eligibility criteria for veterans, covered programs, and payment of benefits under Chapter 33 (the VA's shortened term for the Post-9/11 GI Bill program).

Highlights include the following:

Last-payer provision. Except for federal Title IV grants, veterans' benefits will cover only actual net cost after the application of any waiver of, or reduction in, tuition and fees, and any scholarships, grants, or other assistance that is "provided directly to the institution and specifically designated for the sole purpose of defraying tuition and fees." NACUBO and others are concerned that this will add timing issues and complexity to the payment process.

Living allowances. Veterans enrolled more than half-time in educational programs taught exclusively through distance education will now be eligible for up to 50 percent of the usual housing allowance. For both distance education students and those attending foreign institutions, the housing stipend will be based on a national average rather than tied to the location of either the student or the school.

Veterans carrying less than full-time loads may see their living allowances decline, however. Now, a veteran attending school more than half-time is eligible for a full stipend. Under the new bill, the living allowance will be prorated based on the number of credit hours. In addition, breaks between terms will no longer count in determining the monthly allowance.

Program eligibility. The types of educational programs eligible for Chapter 33 benefits are expanded to cover (1) non-degree programs offered by institutions not considered "institutions of higher learning" under VA rules, (2) flight training, and (3) apprenticeships and on-the-job training. This brings eligibility under Chapter 33 more in line with that for the earlier (and still existing) Montgomery GI Bill under Chapter 30. Benefits for nondegree programs track those for currently eligible programs. Flight training is capped at $10,000 for tuition and fees. For apprenticeships or on-the-job training, veterans are eligible for only a housing stipend that decreases in value over a 24-month period.

Qualifying service. The amendments fix some anomalies in the original Post-9/11 GI Bill concerning qualifying service in the armed services. The most important is to credit full-time service in the National Guard just as Reserve active duty is counted. This change is retroactive to Aug. 1, 2009, but no benefits may be paid prior to Oct. 1, 2011.

Testing. Veterans will be able to use their benefits, within certain limits, to cover the costs of multiple certification and licensing tests, as well as national admissions tests and those used to provide course credit. 

Payments to institutions. For the first time in more than 30 years, the reporting fees paid to educational institutions by the VA will increase from $7 to $12 per eligible veteran or other person receiving VA education benefits. Fees paid to institutions that receive and forward educational assistance checks to veterans will increase from $11 to $15. The new law, however, requires institutions to use the fee revenues solely for providing certifications or supporting programs for veterans.

Continuing Efforts

Even before the bill was signed, there was talk in Washington of a subsequent "corrections" bill. In the rush to move the bill along during the lame-duck session, the Senate bill was passed "as is" by the House, but many stakeholders—including representatives of colleges and universities—preferred certain provisions in the House bill. Two provisions are of particular concern: the lack of a hold-harmless provision for veterans already pursuing an educational program who will find their tuition and fee benefit decreased, and the last-payer provision.

NACUBO continues to work with the VA to resolve issues with administration of Chapter 33, especially payments and refunds. Members with interests in these efforts are invited to join a new e-group through MyNACUBO on its Web site

NACUBO CONTACT Anne Gross, vice president, regulatory affairs, 202.861.2544

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