With time ticking down, lawmakers voted to keep student loan interest rate for federally subsidized Stafford loans at 3.4% for another year, attaching the compromise language, formerly H.R. 4628, to the highway bill (H.R. 4348). The measure passed the House and Senate on Friday. Had Congress not acted, the current authorization subsidizing student loan rates was set to expire June 30. and the rate would have doubled. The reauthorization is estimated to cost between $5.9 billion and $6.2 billion, which is slated to be offset by two provisions related to pensions and a reduction of the time students are eligible for federal interest subsidies. A change in the way the government estimates how much a company must contribute to employee pension funds is estimated to raise $9.5 billion. Lawmakers said that $5 billion will be used to fund the extension of student loan rates. An additional $500 million will come from an increase in premiums paid by employers to the Pension Benefit Guaranty Corporation. And $1.2 billion will be raised by reducing the time students are eligible for government interest subsidies. Under the bill, students will now only be eligible for in-school interest subsidies for 150% of their program time, up to six years if pursuing a bachelor’s degree, and up to three years if pursuing an associate degree. The offset was suggested by Republicans in a former proposal and was also included in the president’s budget proposal.
On Tuesday, the Department of Education announced its findings under new rules determining if a for-profit university will qualify for federal loans, saying that 190 career-training institutions do not currently meet standards. The new rule, which will begin withholding funding in 2015, requires a minimum percentage of a school’s graduates be able to meet their loan-repayment obligations or students attending that school will not be eligible for federal loans, and the school will not be eligible for federal grants. To remain eligible, programs must pass one of three tests: a minimum of 35% of former students must meet loan-repayment commitments; the average graduate’s annual payment must be less than 12% of their income; or the average graduate’s annual payments must account for less that 30% of the graduate’s discretionary spending. Programs that fail all three tests in three years out of a four year window will lose federal funding.
The Association of Public and Land-Grant Universities held an event Tuesday, “150 Years of the Morrill Act: Advancing the Legacy,” in honor of the sesquicentennial anniversary of the Morrill Act, which established the university land grant system. Bill Gates and Secretary of Education Arne Duncan were among speakers who told students, teachers and administrators that tuition prices must be kept low in the face of staggering student debt in order to maintain the university system. They also encouraged the use of technology to engage audiences, while other speakers highlighted the need for the teaching of STEM subjects.
On Thursday, the House Judiciary Committee approved by voice vote legislation that would require universities or other academic institutions which enroll foreign students to be accredited by an agency recognized by the Department of Education. The bill would put limitations on the granting of non-immigrant student visas (F-visas) and requires that institutions meet certain criteria before they qualify as programs for which students can obtain a visa. The bill allows a three-year exemption period for institutions that are approved by the Department of Homeland Security but have not yet been accredited by an agency that the Department of Education recognizes. During committee debate, an amendment was approved to allow the secretary of homeland security to waive the requirement for educational institutions working in good faith to gain accreditation.
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 2, 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.