DC Shuttle: Congress Scrutinizes Colleges’ Unrelated Biz Income; Takes Interest in Loan Rates

Rewriting K-12 law. On Tuesday, the House Committee on Education and the Workforce held a hearing on state and local accountability systems for education. Chair John Kline (R-MN) outlined four Republican priorities for rewriting the nation’s K-12 education law, known as the Elementary and Secondary Education Act (ESEA) or No Child Left Behind: restore local control, reduce the federal footprint, improve teacher effectiveness, and empower parents.

College tax compliance. On Wednesday, the House Ways and Means Committee’s Oversight Subcommittee held a hearing on the Internal Revenue Service (IRS) colleges and universities compliance project. The hearing addressed a report by the IRS called the Colleges and Universities Compliance Project Final Report. Lawmakers said they were disturbed that the report found a high degree of noncompliance on unrelated business income, revenue earned by nonprofit organizations in ways that are not directly related to their missions. An IRS witness told the panel that the universities most scrutinized were not a representative sample but constituted beginning research into the matter.

Warren’s first bill would hold down student loan rates. On Wednesday, first-term Sen. Elizabeth Warren (D-Mass.) introduced her first bill (S.897) which would stop the student loan interest rate from doubling to 6.8% in July 1. The bill directs the Federal Reserve to provide money to the Education Department to loan out for federal student loans at the same rate as banks can borrow money through the Federal Reserve’s discount window.

Student loan rate bill introduced in the House. On Thursday, House Education and the Workforce Committee Chair Kline and subcommittee on Higher Education and Workforce Training Chair Virginia Foxx (R-NC) introduced the Smarter Solutions for Students Act (H.R. 1911). The bill would require interest rates for all federal student loans to be based on the 10-year Treasury note, plus 2.5%. The bill would cap rates at 8.5%. Kline pointed out that the proposal is similar to President Obama’s. The president’s proposal does not include a cap. Republican leadership has previously suggested their student loan rate legislation would go through Kline’s committee and the bill may soon be considered by the full House. The bill would apply to loans starting July 1.

As a member of New England Council, we publish the DC Shuttle each week featuring higher ed news from Washington. This edition is drawn from the Council’s Weekly Washington Report Higher Education Update, of May 13, 2013.

Founded in 1925, the New England Council is a nonpartisan alliance of businesses, academic and health institutions, and public and private organizations throughout New England formed to promote economic growth and a high quality of life in the New England region. The Council’s mission is to identify and support federal public policies and articulate the voice of its membership regionally and nationally on important issues facing New England. For more information, please visit: www.newenglandcouncil.com.


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