U in no rush for new higher-ed act

A University official said the current deficit would make the act harmful, if it passed now.

Cati Vanden Breul

The federal government has not reauthorized the Higher Education Act since 1998, but University officials said students would benefit if Congress waited even longer. The act was to have been renewed in 2003, but the House and Senate have not yet been able to come to agreement on what provisions to include. Instead, the government has continued to extend the 1998 act.

The House Committee on Education and the Workforce and the Senate Committee on Health, Education, Labor and Pensions both passed bills this year reauthorizing the act “which governs most federal financial aid programs ” and now must reconcile the differences before the full Congress can vote to renew the law.

Although a vote was expected to take place this fall, the unexpected devastation from Hurricane Katrina and other budget problems have prevented Congress from taking action, said Alexa Marrero, press secretary of the House committee.

“Obviously, Congress has been very busy, but we are interested in passing higher education reform as quickly as we can,” Marrero said.

But John Engelen, director of federal relations for the University, said it would be beneficial if Congress waited to reauthorize the act until it had a better idea of how to reduce the national budget deficit.

“There are some things that could be fixed about the current law, but the current law is better than what might get passed in this difficult budget environment,” Engelen said.

On Friday the House passed a bill that would cut funding for student loans by $14.5 billion as part of a larger package of cuts aimed at reducing the federal deficit.

Engelen said University students would pay an additional $3.5 million in fees to the federal government next year if the House bill becomes law.

“That (bill) has a huge impact nationally and at the “U,’ ” he said.

But Marrero said the majority of the savings would come from reduced subsidies to lenders and not from increased fees.

By reauthorizing the Higher Education Act, Congress is aiming to expand college access for low-income students, she said, and the House and Senate are working together to achieve that goal.

The current House proposal would benefit students by making Pell Grants available year-round, increase student loan borrowing limits for first and second-year students, and put colleges that consistently raise tuition and fees by more than twice the rate of inflation onto a government watch list, she said.

But the House proposal also contains provisions different from the Senate version that would cause the University unnecessary expenses, Engelen said.

He said the House renewal requires universities to report information to the federal government that Congress could obtain from state legislatures.

“If they’re hoping to learn more about how the University operates by requiring a bunch of new reports, they could just look at what we already do for the Minnesota state Legislature and governor,” Engelen said.

University Office of Student Finance Director, Kris Wright, said the two bills also differ on the way they calculate student-loan interest rates.

The Senate version would change interest rates to a fixed 6.8 percent, while the House proposal would keep the rate variable and cap it at 8.25 percent.

Wright said the variable rate would be more costly for students because interest rates are likely to continue increasing until the government can get the budget deficit under control.

But Marrero said keeping the rates variable allows students to take advantage of lower interest rates when the market fluctuates.

Congress is expected to vote on the reauthorization within the next few months, but it depends on what happens with the schedule, Marrero said.