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Higher Education Act Addresses College Costs

August 11, 2008

Just before leaving town for its August recess, Congress finally finished its work reauthorizing the Higher Education Act--five years later than scheduled. The Higher Education Opportunity Act (HR 4137) passed both the House and Senate by wide margins and President Bush is expected to sign the bill later this month. While the long deliberations on reauthorization of the HEA waxed and waned, Congress addressed a number of issues in other bills, starting new grant programs (Academic Competitiveness Grants, National SMART Grants, TEACH Grants) and cutting interest rates and subsidies to banks in the student loan programs. Consequently, the HEOA is not an exciting bill in many ways, but it is very long, includes numerous new mandates for colleges and universities, and a number of new targeted programs.

This update will provide an overview of key provisions in Title I for business officers, including college price transparency and textbook costs. Over the next few weeks, NACUBO will provide greater detail on various sections of the legislation.

Section 111 (HEA 132), Transparency in College Tuition for Consumers

Using public watch lists of institutions that raise their tuition higher than others or faster than inflation has been part of the HEA discussion on controlling rapidly escalating college prices since it was first proposed by former committee chair Buck McKeon (R-CA) in 2003. The sanctions that were part of that early proposal, including loss of student aid funds, are mostly gone but the number of lists has multiplied.

First, some terms need to be defined as they are used in this section.

Cost of attendance. Cost of attendance has its usual meaning for student aid purposes--tuition, fees, room and board, books, supplies, and transportation--but in this case it is calculated as an average annual cost for a first-time, full-time undergraduate student.

Net price. The HEOA defines net price as "the average yearly price actually charged to first-time, full-time undergraduate students receiving student aid at an institution of higher education after deducting such aid." It is calculated by subtracting average grant aid from all sources provided to aided students from the institution’s cost of attendance. Students with no grant aid are not counted in the calculation.

Tuition and fees. Again, average annual tuition and fees for first-time, full-time undergraduates is used.

Public institutions should use in-state figures for cost of attendance and tuition and fees, and should only consider in-state aided students in calculating net price.

College Affordability and Transparency Lists

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

The categories of institutions are determined by type (two-year, four-year, and less-than-two year) and control (public, nonprofit, for-profit). Altogether, there are 54 different lists mandated. There is no sanction attached to appearing on the lists, except for a report that institutions on lists reporting high increases under (c) and (d) above must file with the Secretary of Education.

Exemption. For the lists under (3) and (4) above, 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.

Reports on Cost Increases

In addition to being presumably "shamed" by public exposure, institutions that appear on the cost increase watch lists will be required to submit a report to ED that provides:

  • 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.

The ED secretary will issue an annual report summarizing those received from institutions. In addition, the College Navigator Web site will include a link to each institution’s submission.

State Spending

ED will also be required to post a report annually on its College Navigator Web site providing information for the previous five years on spending by states to support higher education including:

  • Percentage change in spending per FTE student at all public institutions in the state
  • Percentage change in tuition and fees for those students
  • Percentage change in state spending on need-based and merit-based aid to full-time students enrolled in public institutions in the state

Net Price Calculators

Within one year, ED is instructed to develop, in consultation with institutions and other experts, a model calculator to help individual students or prospective students estimate the net price of attending a particular institution. The calculator should estimate anticipated need- and merit-based aid for the individual student’s circumstances to the extent practicable.

Within two years after ED makes its net price calculator available, each institution of higher education that receives Title IV student aid funds must make a net price calculator available on the institution’s Web site. Institutions may choose to use the tool developed by ED or use its own, as long as, at a minimum, the data elements used by ED’s model are included. Institutions will be required to post certain disclaimers as well.

Consumer Information

The list of data elements that must be made available by ED, now by posting to the College Navigator Web site, continues to grow. The list runs literally from paragraph (a) to (z) and includes the following items.

  • Percentage of students from in-state, other states, and foreign countries
  • Percentage of first-time full-time degree-seeking students disaggregated by race and ethnic background
  • Cost of attendance and average amount of grant and loan aid awarded
  • Graduation rates
  • Links to campus security data
  • Links to reports on cost increases prepared by institutions that were in the top five percent for percentage increase in tuition and fees or net price (discussed above)

Pricing Summary Page. In addition, the Web site must include a link to each institution’s "Pricing Summary Page" and a searchable database of the information. The Pricing Summary Page must contain the following elements:

  • Tuition and fees for the three most recent years, and the average annual percentage change
  • Net price for the three most recent years, and the average annual percentage change
  • Net price for students receiving Title IV aid, disaggregated by income category. Between July 2010 and June 2013, this element would be reported for the most recent year. After that, data for the three most recent years would be required.

Multi-Year Tuition Calculator. In addition to the net price calculator discussed above, ED is given a year to develop a tool to help current and prospective students estimate the amount of tuition an individual may pay to attend a particular institution of higher education. The calculator would take into account the normal duration of the program of study and the percentage increase in tuition over the previous three years for that institution. If the institution had a guaranteed tuition program, the calculator would be able to make estimates accordingly.

Section 112 (HEA SEC. 133), Textbook Information

Another aspect of college costs that Congress seeks to influence through the HEOA is the cost of textbooks--addressed through "enhanced transparency and disclosure with respect to the selection, purchase, sale, and use of course materials." HEOA will require various parties involved to share more information and in some cases, reconfigure how textbooks are sold, beginning on July 1, 2010.

Publishers will be required to provide the following information along with any textbook marketing materials sent to faculty members or other person or entity at a Title IV institution:

  • The price that would be charged to the campus bookstore for the textbook
  • The price that would be charged to the public
  • Copyright dates of the three previous versions and a description of the revisions that have been made compared to the previous version
  • Whether the textbook is available in any other format such as paperback or unbound, and the prices for those

Publishers will also be required to sell any supplemental materials that are sold bundled with a textbook separately as well.

Institutions will be required "to the maximum extent possible" to include in their online course schedules the International Standard Book Number (ISBN), identifying information, and retail price for all required and recommended books and supplemental materials for each course offered. If the institution determines that it is not practicable to provide the information for a textbook or supplemental material, it must so indicate by inserting "To Be Determined" instead. If an institution provides a written course schedule, it should include a notice that textbook information is available in the online version and give the appropriate URL.

Institutions will also be required to provide their affiliated bookstores with information on courses and books, and expected enrollments, "as soon as is practicable." Institutions are also encouraged to share information with students about textbook rental programs, guaranteed textbook buy-back programs, alternative content delivery programs, or other cost-savings strategies available.

The statutory language does not allow ED to promulgate regulations to implement this section.

Section 114 (HEA Section 135), In-State Tuition Rates for Armed Forces Members, Spouses, and Dependent Children

Effective July 1, 2009, members of the Armed Forces on active duty for more than 30 days, and their spouses and dependent children, may not be charged out-of-state rates for tuition and fees at a public institution in the state where he or she is domiciled or on duty. Further, the right to pay in-state rates continues for as long as the individual remains continually enrolled, regardless of subsequent change of permanent duty station.

Section 116 (HEA Section 137), State Commitment to Affordable College Education

The state maintenance-of-effort provision was one of the most contentious issues for the conference committee. Under the compromise that was worked out, states will risk losing funding for a new Challenge Grant program under Section 781 of the HEA if state funding for higher education in any year does not at least equal the average the state spent over the previous five years. For support for public institutions, funds for other than capital or research and development expenses will be counted. For support for private institutions, student financial aid costs will be considered.


The House Education and Labor Committee has prepared a summary of key provisions of HR 4137.

The Senate Health, Education, Labor and Pensions Committee has posted the final version of the bill and the conference managers’ report.

NACUBO Contact: Anne C. Gross, vice president, regulatory affairs, 202.861.2544 or Matt Hamill, senior vice president, Advocacy and Issue Analysis, 202.861.2529