Education: Federal Role

Every several years, Congress reauthorizes the Higher Education Act (HEA) and the Elementary and Secondary Education Act (ESEA), also known as the No Child Left Behind law. These bills establish national goals for improving the nation’s kindergarten through college (K-16) public school system and provide direction and federal funding for both public and private, non-profit educational institutions. They address:

• Teacher training
• Expanded use of information technology
• Improved education access for non-traditional students or individuals on welfare seeking training
• Academic intervention that furthers student education
• Advanced educational initiatives

Many K-16 institutions compete for federal funding to become model institutions capable of demonstrating the effectiveness of educational initiatives outlined in these bills. Federal funding provides an incentive for institutions to advance initiatives that are consistent with these national policy goals.

The most recent ESEA reauthorization contained four primary guidelines: (1) stronger accountability to ensure academic results; (2) increased flexibility and local control; (3) expanded options for parents; (4) an emphasis on teaching methods that have been proven to work. Specific goals in the legislation include:

• Improving the academic achievement of disadvantaged students
• Preparing, training, and recruiting high quality teachers and principals
• Establishing programs to create smaller student to teacher ratios.

The bill is considered a significant deviation from existing federal policy because it provides states significantly more control over education policy. At the same time, the bill requires states to establish standards for school districts and schools, which must make "adequate" yearly progress. Schools that fail to make progress will be held accountable.

Congress is now in the process of drafting legislation that will reauthorize the Higher Education Act of 1965 [P.L. 89-329].  The legislation aims to improve higher education by addressing the issues of affordability, quality, and accountability, and strengthens the Pell Grant program in order to provide greater access to low and middle income students and minorities.

In October 2007 the House and Senate passed H.R. 3927, the third extension to the Higher Education Act. The bill moves the expiration date of the Act to March 31, 2008.  The bill extends student aid programs under the HEA, to allow time for the House to finalize and pass their bill. The key provisions of the Senate HEA Reauthorization bill include:

• Set at $6,300 the authorization level to which Congress can raise the maximum amount Pell Grant. But the legislation would provide no funds to assure an actual Pell Grant increase; any such rise could occur only through the budget reconciliation legislation.
• Significantly increase the amount of information that colleges would be required to report about their costs and prices, and create a “Higher Education Price Increase Watch List” to rank institutions with tuition and fees that “outpace the applicable price index” for its type of institution.
• Institute a series of restrictions on the relationships between lenders and guarantee agencies and colleges and universities, consistent with many of the changes included in the Student Loan Sunshine Act and the code of conduct that New York’s attorney general, Andrew M. Cuomo, has promulgated. Among other changes, the Senate bill would phase out the “school as lender” program by 2011.
• Create a federal clearinghouse that would allow students to shop around for the best loan terms.
• Ease the requirement that for-profit colleges derive at least 10 percent of their revenue from sources other than federal financial aid funds, by expanding the sources of funds that the institutions may count in the 10 percent figure (additions include funds from 529 savings plans and institutional aid, among others).
• Require teacher-preparation programs, as a condition of receiving federal student aid, to set "annual, quantifiable" goals for increasing the number of prospective teachers trained in high-need areas such as mathematics, science, and special education.

The House and Senate continue to work on Fiscal 2008 Appropriations bills, with the House having completed all spending measures . Among the benefits to the higher education community is an increase in funds for the Pell Grant program and to the National Science Foundation. Both Chambers have passed their respective bills to fund the Departments of Labor, Health & Human Services and Education (H.R. 110-231, S.R. 110-107), but the differences between the bills still have to be worked out in by a conference committee.

Boost for STEM education

The President has signed H.R. 2279 (S. 761), the America Creating Opportunities to Meaningfully Promote Excellence in Technology, Education, and Science Act ­ or, for short, the America Competes Act. The measure is designed to elevate America's global economic competitiveness with improved education initiatives in the areas of science, technology, engineering and mathematics (STEM). Many of the provisions were recommended in an influential 2005 report by the National Academies, "Rising Above the Gathering Storm: Energizing and Employing America for a Brighter Economic Future.” The compromise bill would authorize all of the new science-education programs proposed by President Bush in his 2006 State of the Union address.

The bill emphasizes increasing the number of schoolteachers qualified to teach science, and it would finance college programs to produce more of them.

The bill would even encourage universities to educate professors to communicate their work better to the public. It would require universities, for example, to train scientists to conduct their research ethically.

Department of Education: The Competes Act would authorize $151-million in new competitive grants for university programs that prepare schoolteachers in science, math, and "critical" foreign languages. The program would award students bachelor's degrees in those fields as well as teaching certificates. A separate new grant program would provide $125-million for projects that give a master's degree and teaching credentials to "science professionals." The bill would also authorize competitive grants to states to promote better "alignment" of elementary and secondary education "with the knowledge and skills needed to succeed" in college courses.

National Science Foundation: The Competes initiative would authorize large increases for a select number of science-education programs involving universities. They include a 14-fold expansion, to $140.5-million by 2010, of the NSF's Robert Noyce Scholarship Program, which provides money to undergraduates who agree to work as science teachers in schools after they graduate. The bill would authorize doubling spending on the NSF's Math and Science Partnership program, which encourages universities to work with elementary and secondary schools to improve science teaching. The measure would also double the STEM Talent Expansion Program, which gives universities grants to increase their production of graduates with science degrees.

The bill would issue many other directives to the NSF, including one to finance programs at universities that award "professional science master's degrees," for students intending to work in industry. Another provision would authorize a pilot program to help younger scientists land NSF grants. The legislation would also expand the agency's support for high-performance computing. In addition, researchers receiving NSF grants would have to write plans for providing mentorship to postdoctoral researchers they employ.

Department of Energy: The Department of Energy would be authorized $300-million in 2008 to establish the Advanced Research Projects Agency for Energy, or ARPA-E. That unit, modeled after a similar, successful agency in the Defense Department, would finance particularly innovative research to develop new sources of energy. The legislation would also authorize grants to young scientists to help them begin careers at universities and the department's laboratories. It would establish the agency's first graduate research fellowships. And the measure would establish or expand degree programs in nuclear science and "hydrocarbon systems."

White House Office of Science and Technology Policy: The bill would establish a President's Council on Innovation and Competitiveness, similar to the existing President's Council of Advisers on Science and Technology.

Student Pell Grants/Loan Legislation Passes Congress

Congress returned from its August recess and immediately approved legislation that will cut subsidies to lenders who participate in the federal student loan program and use the savings to boost Pell Grants. The Senate passed The College Cost Reduction and Access Act (H.R. 2669) Sept. 7 on a 79-12 vote and the House followed with an equally overwhelming vote of 292-97.

The bill that will go to the president also cuts the student loan interest rate in half. The administration has indicated that the president will sign the legislation.  Under the Federal Family Education Loan (FFEL) program, private sector lenders are paid a subsidy to make student loans with favorable interest rates and repayment provisions. 

The final bill cuts $20 billion in subsidies. Lenders have vigorously opposed the measure and have emphasized that cuts of this magnitude will have serious consequences for the services that institutions and borrowers receive.  

The major provisions of the bill include:  

• Subsidies paid to for-profit lenders will fall by .55 percent and by .40 percent to non-profit lenders. 
• Most of the savings will be used to boost Pell Grant funding from the current level of $4,310 to $4,800 in the 2008-09 and 2009-10 academic years, $5,000 in the 2010-11 and 2011-12 academic years, and $5,400 in 2012-13.
• Other savings from the subsidy cuts will be used to reduce the interest rate on new federal student loans from the current level of 6.8 percent to 3.4 percent. This reduction applies only to subsidized loans and will be phased in over four years after which time the interest rates will return to the current level unless new legislation is enacted to extend the reduction.
• In an effort to help students manage repayment, student loan payments will be limited to a reasonable percentage of income to assist borrowers who are unable to repay their loans.
• The Department of Education will craft a plan to auction off the right to make loans under the federal Parent Loan for Undergraduate Students (PLUS) program. Auctions will be conducted on a state-by-state basis and the right to make loans will go to the financial organizations that make the lowest bid.    
• Students enrolled in teacher preparation programs will be eligible for new $4,000 grants that would convert to loans should the individual not serve as a full-time teacher for four years within eight years of attaining a teaching credential.   
• Loan forgiveness is provided for individuals who work in wide array of public service jobs for 10 years, including government and 501(c)(3) organizations, such as colleges and universities. 

Taken together, this bill makes the largest changes in the FFEL program since it was established as the Guaranteed Student Loan (GSL) program in 1965. Subsidy cuts have been made in the past, but those were much smaller than what will be put in place under this bill.