DC Shuttle: House Spending Bill Calls for Deep Ed Cuts; New Reports Question “Private” Loans, Student Visa Oversight

The FY 2013 Labor-HHS-Education spending bill adopted by a House Appropriations subcommittee panel on Wednesday would reduce funding for the U.S. Department of Education by $1.1 billion from 2012 levels and eliminate funding for the Obama administration’s Race to the Top Program. It would also rescind $400 million in unspent appropriations for the Race to the Top program in 2012. In other areas, including most Elementary and Secondary Education (ESEA) formula grants, the bill would maintain current spending. Grants for students with disabilities would be increased by $500 million. Under the bill, restrictions would be set for spending on the Education Department’s gainful employment rules which target for-profit colleges. The bill matches the bill passed by the Senate Appropriations Committee last month with regard to increasing the maximum Pell grant for each student to $5,635, but does not include the expansion of eligibility for Pell Grants included in the Senate version.

On Thursday, the Senate Health, Education, Labor and Pensions (HELP) Committee held a hearing on controlling the cost of college. The committee’s Ranking Republican, Sen. Michael Enzi (R-WY), said that long-term funding of Pell grants needed to be a priority to move past the costly short-term solutions that have been the norm. Higher education experts told the panel that financial aid must focus on students who have financial need and that financial burden has to be more clearly displayed to students at an early stage. Sen. Al Franken (D-MN) suggested the use of a universal financial aid letter and asked about connecting college to post-graduate employment. With collective student debt recently surpassing credit card debt as the largest segment of American debt, the Obama administration has said controlling college costs is a priority.

On Friday, the Consumer Financial Protection Bureau (CFPB), in conjunction with the Education Department, released a report highlighting “key attributes of the private student loan marketplace.” According to the report, students and graduates owe approximately $150 billion in private student loans, while the overall outstanding loan debt is more than $1 trillion. The joint report looks at the growth of the private student loan market over the past 10 years as well as how lenders and marketers sought to change their relationships with students by appealing more directly to them. The report also looks at how many may not have understood how the private loan marketplace works, as a number of students took out more than they needed, or had federal loan options that they did not pursue. Finally, the report makes recommendations by both the CFPB and the Education Department to Capitol Hill “to improve the private student loan marketplace and address consumer protection issues.”

On Tuesday, the Government Accountability Office (GAO) delivered a report to Congress that was critical of U.S. Immigration and Customs Enforcement (ICE) oversight of student visas. ICE manages the Student and Exchange Visitor Program but the report found that it “has not developed a process to identify and analyze program risks” and cannot provide reasonable assurance that visas are acquired legitimately.

The Department of Education announced Thursday that six more states and the District of Columbia have had waivers approved excusing them from the mandates of the No Child Left Behind (NCLB) Act. The administration approved the waivers of Arizona, Kansas, Michigan, Mississippi, Oregon and South Carolina, bringing the total of states with approved waivers to 32. The states were required to propose standards that they would pursue in place of the NCLB obligations.

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 July 23, 2012.

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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