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Federal File

Coverage of legislation and regulatory activity that affects higher education

By Liz Clark

HEA Reauthorization May Take Shape in 2016

Fifty years ago, when President Lyndon Johnson signed into law the Higher Education Act (HEA) of 1965, he stated: "So, when we leave here this morning, I want you to go back and say to your children and to your grandchildren, and those who come after you and follow you—tell them that we have made a promise to them. Tell them that the truth is here for them to seek. And tell them that we have opened the road, and we have pulled the gates down and the way is open, and we expect them to travel it."

Since then, the United States has seen some great success in higher education attainment:

  • Higher percentage of college completion. The percentage of adults with a college degree increased from 10 percent in 1965 to over 30 percent today.
  • More students enrolling in higher education. In 1965, fewer than six million students were enrolled in public, private, or for-profit colleges; today, more than 20 million students are enrolled.
  • Increased number of low-income and minority attendees. Low-income student enrollment rates have increased from 35 percent in 1975 to 52 percent in 2011. Likewise, in the early 1970s, 45 percent of minority high school graduates enrolled in postsecondary education; by 2011, 67 percent did so.

However, stubborn challenges remain. Student loan borrowing is growing and the purchasing power of the Pell Grant has eroded significantly; a Pell Grant today covers just 30 percent of the cost of attending a four-year public college. Large enrollment gaps remain between wealthy and low-income students, as well as between White students and students of African-American or Hispanic background. 

Large enrollment gaps remain between wealthy and low-income students, as well as between White students and students of African-American or Hispanic background.

Fast-forward a Half Century

Fifty years later, President Barack Obama continues to maintain as a top White House priority the accessibility, affordability, and value of higher education. He has charged his administration with making college more affordable with "real reforms that would bring lasting change."

In 2009, Obama set a goal that by the year 2020 the U.S. would rank highest in the world in the proportion of adults with a college education. In 2014, 41 percent of American adults between the ages of 25 and 64 had earned an associate degree or higher, which ranked the United States fifth-highest in the world, according to a recent report from the Organisation for Economic Cooperation and Development.

During the State of the Union address in 2012, Obama made clear his concerns with increased college costs, stating, "If you can't stop tuition from going up, the funding you get from taxpayers will go down ... . Higher education can't be a luxury—it's an economic imperative that every family in America should be able to afford."

On a 2013 bus tour aimed at bringing greater attention to his higher education legislative proposals, the president announced plans for a college ratings system. Two years later, the Department of Education translated this call for a ratings system into a consumer-friendly "Scorecard" tool.

Since 2009, the Obama administration has overhauled student loan programs, aggressively focused on for-profit colleges, emphasized community college enrollment, addressed campus sexual assault, and turned up the pressure on college accountability measures and regulatory issues.

Working together with Capitol Hill legislators, Obama is likely to continue, in this last year of his presidency, efforts to build a legacy of addressing higher education concerns. In addition, with the HEA due for reauthorization, in recent years lawmakers at both ends of Pennsylvania Avenue have proposed new college programs, rules, regulations, and reforms, all with reauthorization in mind. 

Legislative History

The most recent reauthorization, the Higher Education Opportunity Act, was signed into law on Aug. 14, 2008. The last comprehensive reauthorization occurred in 1998, funding programs through 2003. Between 2003 and 2008, 14 laws temporarily extended the HEA.

Technically, the 2008 reauthorization expired on Sept. 30, 2015. However, given changes made in subsequent legislation, the federal government no longer needs temporary extensions for all HEA programs. The current law allows most HEA programs to operate as long as there are appropriations—with the Perkins Loan Program being a notable exception. 

In 2015, however, Rep. John Kline (R–MN) and Sen. Lamar Alexander (R–TN), respective chairmen of the House and Senate committees responsible for education policy, made reauthorization of K–12 policies a priority, moving forward the Every Student Succeeds Act of 2015.

Meanwhile, however, policy staff also worked throughout 2015, behind the scenes, developing a framework and hammering out details for an HEA renewal. Sen. Alexander, working closely with his Democratic counterpart, Sen. Patty Murray (D–WA), has made deregulation a top priority, as well as simplifying the federal aid application process and instituting new accountability measures.

Draft legislation is expected soon, but has not yet been made public.

HEA Reauthorization Priorities

Sen. Alexander has publicly identified a number of goals related to HEA reauthorization.

NACUBO is eager to see legislation that eases the burden of confusing and unnecessary regulations, thereby enabling institutions to focus on education, student safety, and stewardship of federal funds.

  • Deregulation. In 2013, a bipartisan group of senators established the Task Force on Federal Regulation of Higher Education to help inform efforts to reauthorize the Higher Education Act.

Made up of 16 college, university, and association presidents and chancellors, the task force established broad goals: Summarize the increasing burden of federal regulations; identify regulations of particular concern; explain those regulations and recommend changes; and offer long-term process improvements. NACUBO provided input about the particular concerns of business officers.

Among the regulations addressed in a 144-page document are the financial responsibility standards; rules for return of Title IV funds when a student withdraws; voluminous consumer information requirements; and campus safety rules. NACUBO is eager to see legislation that eases the burden of confusing and unnecessary regulations, thereby enabling institutions to focus on education, student safety, and stewardship of federal funds. Sen. Alexander remains committed to including in the draft legislation recommendations from the report.

  • Simplification. In June 2015, Sen. Alexander and Sen. Michael Bennet (D–Colo.) released a draft bill to simplify the process of applying for and receiving federal financial aid to attend college, and allow year-round use of Pell Grants.

The bill would also address the problem of some students borrowing too much money, and simplify the options students have to repay their federal loans. Elements of this draft bill are likely to be included in the reauthorization language.

  • Accountability. In the spring of 2015, Sen. Alexander asked for public input on several white papers that outlined the committee's concerns, and offered a number of provocative policy ideas.
  • Risk-sharing ("skin-in-the-game"). In a white paper titled "Repayment of Federal Student Loans and Cost Structure," Sen. Alexander focuses on realigning incentives so that colleges and universities have a "stronger vested interest and more responsibility in reducing excessive student borrowing."

Proposed strategies include requiring institutions to assume a liability based on some factor related to former students' repayment rates, guarantee a percentage of their students' federal loans, or pay yearly premiums into an insurance fund.

In addition to joining a response against this idea, prepared by the American Council on Education (ACE) and endorsed by 25 other higher education associations, NACUBO submitted its own observations—from an accounting, financial reporting, and auditing perspective—on two ideas presented in the white paper.

NACUBO is wary of so-called "risk-sharing" proposals that could potentially limit access, increase costs, or reduce services and educational offerings. However, Sen. Alexander's "risk-sharing" notion, also referred to as "skin-in-the-game," has gained significant political support, driven by public concerns related to student borrowing and student success and completion.

  • Higher education accreditation. Another white paper questions whether to overhaul the accreditation system and the federal government's reliance on accreditation to determine eligibility for federal student aid.

As reauthorization of the HEA takes shape, NACUBO will weigh in on the various proposals, paying keen attention to a number of concerns facing institutions and students. High priorities for NACUBO in the coming months include issues related to (1) increasing college access; (2) improving college affordability and reducing costs; (3) promoting innovation to improve access to and delivery of higher education; (4) reducing federal regulatory burdens, while maintaining adequate safe guards; (5) persistence; and (6) degree completion rates.

NACUBO CONTACT Liz Clark, director of federal affairs, 202.861.2553, @lizclarknacubo


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