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House Passes HEA Reauthorization Bill

February 20, 2008

The House of Representatives, on February 7, overwhelmingly approved legislation to renew the Higher Education Act, the law that sets parameters for most student aid programs, and other higher education policy.  The House bill (H.R. 4137), known as the College Opportunity and Affordability Act, must now be reconciled with legislation that passed the Senate last summer.  The current law expires on March 31, and congressional staff are already beginning to discuss a compromise bill.

Like prior versions of this legislation--and legislation passed by the Senate--the House bill would require greatly increased reporting about how colleges spend their money. The bill would create "Higher Education Price Increase Watch Lists," citing institutions that increase their tuitions above certain levels, albeit far fewer institutions than the version of the bill that was approved by the House Education and Labor Committee.  The 5 percent of institutions in each sector (public, private, for-profit, two-year, four-year) that raise their tuitions by the highest percentage over a rolling three-year period would be required to assemble a "quality efficiency task force." Their charge: to analyze the ways in which the institution is operating "more expensively [than its peers] to produce a similar result" and develop ways to cut the institution’s costs. Institutions on the list would also be required to report to the education secretary on the factors contributing to the price increases.

During debate on the House floor, a number of amendments were adopted, including those that would: (1) require colleges to give prospective students information about expected tuition levels over the next several years; (2) mandate annual reporting to the Department of Education about how much of an institution’s endowment is spent to reduce "costs of instruction offered by such institution, including the specific amounts expended for grants and other aid to reduce the amounts charged for tuition, fees, textbooks, meals, room and board;" (3) direct the Department of Education to study the implications of allowing less than half-time students to be eligible for federal student aid; (4) urge the Department of Education and the Internal Revenue Service to collaborate so that tax return information can be automatically entered into an application for federal financial aid; and (5) create a pilot program to assist colleges establish textbook rental option.

Only one amendment offered on the House floor was defeated.  Rep. Danny Davis proposed that private student loans be dischargeable in bankruptcy proceedings.  This was strongly supported by student groups, but strongly opposed by financial institutions.
The bill would also offer a "carrot" by allowing increased Pell Grant aid to colleges that kept tuition increases low. For the first time, the bill includes a requirement that the states maintain their financial support of higher education--a requirement that has drawn significant opposition from the states. The bill would authorize the Department of Education to withhold funding to states that cut their college spending.

In other areas, the legislation would:

  • require institutions to (a) develop  plans for giving students legal ways to download movies and music, and (b) explore technologies to stop illegal peer-to-peer file sharing;
  • create a new federal "ombudsman" to intervene in disputes related to accreditation, while barring the Department of Education from issuing regulations governing higher education accreditation that would require colleges measure student learning outcomes;
  • give the Department of Education significantly more authority to regulate private student loans;
  • set a $9,000 ceiling on the maximum Pell Grant and allow students to receive Pell Grant funds year-round, instead of during only the traditional academic year;
  • modify the Academic Competitiveness Grant Program, including (a) making the much-maligned grants for low-income students available to part-time students and those seeking certificates as well as degrees, and (b) clarifying that the states, and not the federal government, are responsible for determining whether high school programs are of sufficient academic rigor to qualify students for the grants;
  • mandate that (a) colleges publish the ISBN (international standard book number) for all books in their course schedules to help students shop for books more cost effectively, and (b) publishers expand the information they provide to faculty members about pricing and changes from past editions;
  • make changes designed to simplify the process by which students can qualify for federal financial aid and obtain information about their financial aid awards;
  • establish a loan fund to help institutions that suffer damage or other impairments by natural disasters, such as Hurricane Katrina;
  • extend forgiveness of Stafford Loans to graduates who become state or local prosecutors, public defenders, or other designated professionals;
  • expand significantly the categories of professions that are eligible for forgiveness of Perkins Loans;
  • require institutions to annually submit to the education secretary a fire safety report, including statistics on the number and cause of fires, the numbers of injuries and deaths, and the value of property damage; and
  • direct the Secretary of Education to conduct a study on the amounts, uses, and public purposes of the endowments of institutions of higher education.

The bill would also codify many of the conflict-of-interest rules advocated by New York Attorney General Andrew M. Cuomo as part of his office’s investigation into the financial arrangements between colleges and lenders. The bill would bar lenders from using an institution’s mascot or logo in its marketing materials and require colleges to develop codes of conduct governing their relationships with lenders.

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