DC Shuttle: SCOTUS Ruling Suggests Colleges Can Continue to Use Diversity as Admissions Tool for Now; Congress May Revisit Loan Rate Debate After Recess; US Spends Most on Ed

Supreme Court affirmative action ruling. On Monday, the Supreme Court released a ruling in the case of Fisher v. University of Texas at Austin. The 7-1 decision was indecisive, remanding the case for reconsideration in the lower courts and directing lower courts to use “strict scrutiny” in affirmative action cases. The result of the ruling is that schools will continue to be able to use diversity as a tool in accepting students, as they have since the 2003 Supreme Court ruling. While schools may continue to consider race in admissions, the ruling says they must set a high standard for using affirmative actions programs. The Supreme Court chose not to rule in the specific case, sending the case back to the lower court for further argument. That result does little to address the debate over affirmative action, allowing current practices to continue but not guaranteeing their acceptance into the future, and has led to claims of victory from both side of the debate. Writing for the majority, Justice Anthony Kennedy said that race can be a factor in college admissions, but that courts should use a more rigorous standard when evaluating a specific program. When considering race in admissions, schools must show that they have a compelling interest in promoting diversity and that the specific program is narrowly tailored to serve that interest. The case was the first heard at the beginning of this court session, almost eight months ago, and the long wait for a decision has led to speculation that the decision was a compromise that leaves the question open for further debate and later reconsideration.

Student loan interest rates double. Congress recessed for the Fourth of July, leaving town without agreeing to a means to stop student loan interest rates from doubling today to 6.8%. Congress is expected to come up with a solution after the recess and apply it retroactively. There was fanfare in the closing days of the session with dueling press conferences held to introduce new proposals that were largely symbolic as leadership from both parties admitted they had not reached a deal in time to stop the rate hike. On the Senate floor, Minority Leader Mitch McConnell (R-KY) objected to a request for unanimous consent from Sen. Jack Reed (D-RI) to consider a bill (S. 1238) that would extend the current 3.4% interest rate for one year. Sen. Reed then objected to a similar request from Sen. McConnell to consider a bill introduced Thursday that would tie interest rates to the 10-year treasury note plus 1.85% for subsidized and unsubsidized undergraduate Stafford loans. Under that proposal, introduced with bipartisan sponsorship, the interest rate would be fixed for the life of a loan and borrowers would be permitted to consolidate their loans and cap repayments at 8.25%. While the Congressional Budget Office (CBO) has estimated the bill would reduce the deficit by $1 billion over 10 years, the proposal has been met with opposition from Democrats that would prefer a cap at the outset of the loan. On Tuesday, the Senate Banking, Housing and Urban Affairs Committee held a hearing on private student loan regulation. At the hearing, witnesses warned that allowing the interest rate to double might send borrowers to the private loan market, where it is more difficult to restructure loans. Federal regulators testified that they were continuing to urge private lenders to be more flexible with restructuring and thought there was room for new options despite some concerns that have held up their implementation thus far. Committee Chair Tim Johnson (D-SD) asked regulators to be on guard for changes in the market resulting from changes to federal student loans.

OECD education report. On Tuesday, the Organization for Economic Cooperation and Development (OECD) released a report, Education at a Glance 2013, which details American education practices and results in comparison to those of other developed countries. The report said that the U.S. spends more than other developed nations on its students’ education each year, with parents and private foundations picking up more of the costs. The report finds that American teachers make more than their counterparts around the globe, but that salaries have risen at a slower rate in the U.S. In 2010, the U.S. pent more than $11,000 per elementary student and more than $12,000 per high school student. When factoring in other postsecondary school costs, the U.S. spends $15,171 on each person in the system, the most of any country in the report. The average OECD nation spent $9,313 per person. In 2010, the U.S. spent 7.3% of its gross domestic product on education. The share of public spending accounted for 70% of all education spending, with parents paying 25% and private funds contributing the rest. For postsecondary education, 36% of education spending comes from the public, a stark contrast with most other developed nations that publicly fund a greater percentage of postsecondary education such as college and vocational training.

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 1, 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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