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Business Officer Magazine

Capitol Report

Coverage of legislation and regulatory activity that affects higher education

By Liz Clark and Anne Gross

Pell Grants Caught in Congressional Crosshairs

In April, the House of Representatives passed an FY12 budget resolution (H. Con. Res. 34) by a vote of 235 to 193, with no support from Democrats. The House budget resolution calls for sweeping Medicare reforms and a repeal of the recently enacted health-care reform legislation. It also proposes significant scaling back of federal discretionary spending, which would include cutbacks and modifications to the Federal Pell Grant Program.

The budget resolution, which differs from appropriations legislation, is an annual guide for congressional spending and fiscal policy, but is not signed into law by the president. Typically, the House and the Senate are expected to agree on a budget resolution by April 15, thereby setting an enforceable cap for the year's discretionary spending and allowing appropriators to move forward with detailed spending legislation.

Given the current level of partisan vitriol in Washington, particularly on fiscal policy, the House and Senate have been unable to reach agreement on a final FY12 budget resolution this year, and the appropriations process is moving forward with vastly different spending targets in each of the chambers. Once again, this sets the stage for another delayed budget, heated negotiations that will likely reach the brink of shutdown, and a government forced to operate on continuing resolutions until the dust settles.

Whither the Pell Program?

The Federal Pell Grant Program will continue to be a topic of heated debate as Congress attempts to write, and ultimately agree upon, FY12 spending legislation. The House-passed budget resolution suggests that "increases in Pell Grants appear to be matched nearly one for one by increases in tuition at private universities" and seeks to "return Pell Grants to their prestimulus levels to curb rising tuition inflation and make sure aid is targeted to the truly needy." The Congressional Budget Office has estimated that the parameters set by the House Budget Committee would reduce the maximum award to $3,040 (from $5,550), a cut that Democrats staunchly oppose.

The Pell program has experienced tremendous growth in recent years due to surging enrollment increases and legislative changes to the program. In a weak economy, high unemployment also has encouraged more people to pursue a higher education—and apply for Pell Grants. The Department of Education (ED) expects the number of Pell recipients to grow from 6.1 million in 2008 to an estimated 9.6 million in 2012.

However, some of the increase in cost is attributable to changes that Congress made to the program over the past few years. For example, eligibility revisions outlined in the College Cost Reduction and Access Act of 2007 allowed an increase in the income threshold from $20,000 to $30,000 in the formula that qualified an applicant for the maximum grant award; allowed applicants to exclude more of their income when applying for a grant; and provided new guidelines for exclusions for certain types of income. Later, the Higher Education Opportunity Act of 2008 increased the maximum grant and created the year-round Pell, which was recently eliminated in the FY11 budget agreement.

In dollar figures, in 2008, the maxi-mum Pell Grant was $4,731. As part of the American Recovery and Reinvestment Act, Congress boosted the amount to $5,350 in 2009 and $5,550 in 2010. ED reports that about 25 percent of the growth in Pell Grant costs is attributable to an increase in the maximum grant that students can receive.

The Budget Battle Goes On

While the general public is paying close attention to the federal deficit and the debt, lawmakers are struggling not only with annual appropriations spending decisions, but also with possible new spending caps, modified tax policies, restructuring of mandatory spending, and a reformed budget process. Despite the vociferous debates and elevated levels of concern, there is little public consensus on—or even support for—any proposed solutions, be it tax increases, modest changes in Medicare and Social Security, or other suggested cost reductions. Because of the Pell Grant program's approximately $35 billion price tag and its recent explosive growth, this program will undoubtedly continue to be a target for cutbacks and a symbol of a federal program in need of reform.

NACUBO CONTACT Liz Clark, director, congressional relations, 202.861.2553 

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Update on State Authorization Requirements

Institutions are reminded that the Department of Education (ED) is committed to moving ahead with the planned July 1 implementation of the new state authorization regulation regarding distance education. Under terms outlined in April, ED will postpone enforcement of these regulations until July 1, 2014-if institutions demonstrate "good-faith" efforts to comply.

ED will take into account the following items as evidence of such good-faith efforts:

  • Documentation that an institution is developing a distance-education management process for tracking students' place of residence when engaged in distance education.
  • Documentation that an institution has contacted a state directly to discuss programs the institution is providing to students in that state, to determine whether authorization is needed.
  • An application to a state, even though the application is not yet approved.
  • Documentation from a state confirming that an application is pending.

NACUBO urges institutions to diligently pursue compliance with the requirement. While the guidance provides some breathing room, the department is not providing for a wholesale delay in implementation of the new regulation.

Several efforts are under way to develop a comprehensive directory of state requirements. Once the directory is developed, ED plans to make it publicly available on its Web site at

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

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NCES to Publish College Cost, Affordability Lists This Summer

On July 1, the National Center for Education Statistics (NCES) at the Department of Education (ED) will publish the first college cost and affordability transparency lists, as required by the Higher Education Opportunity Act of 2008 (HEOA). NCES is using tuition, fees, and net price data from the Integrated Postsecondary Education Data System (IPEDS), as reported directly by institutions.

Using public watch lists of institutions that raise their tuition higher than others or faster than inflation was a part of the Higher Education Act reauthorization discussion on controlling college prices. Earlier proposals suggested a number of other sanctions, including triggers resulting in loss of student aid funds. When the HEOA finally passed in 2008, those sanctions were mostly eliminated, but the number of lists had multiplied. Congressman George Miller (D-CA), then chairman of the House Committee on Education and Labor, lauded the provisions for allowing consumer transparency and holding "colleges and universities accountable for their tuition hikes by requiring them to report their reasons for tuition increases."

Qualifying Criteria for List Inclusion

Beginning on July 1, 2011, the secretary of education is instructed to make the following lists, for each of nine categories of institutions, publicly available on its College Navigator Web site.

  1. The 5 percent of institutions that have the highest tuition and fees for the most recent academic year.
  2. The 5 percent of institutions that charged the highest net price for the most recent academic year.
  3. The 5 percent of institutions with the largest increase in tuition and fees, as measured by percentage change, over the three most-recent academic years.
  4. The 5 percent of institutions that show the largest increase in net price, as measured by percentage change, over the three most-recent academic years.
  5. The 10 percent of institutions that have the lowest tuition and fees for the most-recent academic year.
  6. The 10 percent of institutions that have the lowest net price for the most-recent academic year.

With regard to the lists described in points No. 3 and No. 4, an institution will not be placed on the list if the dollar amount of the institution's increase in tuition and fees, or net price, over three years is less than $600.

Action Required

Institutions that appear on lists No. 3 and No. 4—noting, respectively, the highest percentage increases in tuition and fees and the highest net price, over the past three years—will be required to submit a report to ED that provides the following:

A description of the major areas in the institution's budget with the greatest cost increases, and an explanation of the increases.

  • A description of the steps the institution will take to reduce costs in those areas.
  • For institutions that are included on the same list for a subsequent year, a description of progress made on reducing costs.
  • If the institution is not in exclusive control of determining cost increases, the extent of its participation, identification of the state body responsible for determining the cost increase, and any other relevant information.

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

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