Higher Education Act closer to reform and renewal

by Liala Helal

For the first time in seven years, federal financial aid programs are expected to change.

The Higher Education Act, which contains most federal aid programs, recently jumped one step closer to renewal.

The Senate Committee on Health, Education, Labor and Pensions, composed of 20 senators, unanimously passed a bill that would reauthorize and amend the Higher Education Act of 1965. Some amendments to the bill include establishing a maximum authorized Pell Grant beginning at $5,100 and increasing it to $6,300 over the next five years.

The Pell Grant is a need-based federal grant awarded to undergraduate students in amounts currently ranging from $400 to $4,050 per year. Other amendments include awarding Pell Grants year-round and permitting institutions to waive the volunteer service requirement for federal work-study awards.

Another amendment includes having the secretary of education make the financial aid application process easier. A change in how financial aid is calculated could help families whose gross annual income is between $15,000 and $20,000.

Currently, when financial aid is calculated, no family contribution is expected for tuition for students with a family income of $15,000 or less. The bill would allow families making $20,000 or less per year to also automatically claim zero family contribution. This policy would enable students from these families to receive more financial aid.

The bill would also increase the size of loans and maintain the Federal Perkins loan program.

Subsidized borrowing levels for first- and second-year students would increase to $3,500 and $4,500, respectively, and unsubsidized borrowing amounts for graduate students would increase by $2,000 per year.

The bill passed by the Senate committee repeals a number of programs, including educational grants and scholarships.

The bill suggests a new grant program called SMART Grants, which, if approved, will offer up to $1,500 per year to low-income third- and fourth-year students majoring in math or science.

Craig Orfield, communications director for the Senate Committee for Health, Education, Labor and Pensions, said, “The idea is that this is an effort to boost our global competitiveness by encouraging more students to pursue math and science related careers,” he said.

Also in the bill’s amendments is a shift to a fixed interest rate on undergraduate and graduate non-consolidation borrowing. If approved, interest rates will be fixed at 6.8 percent effective July 1, 2006.

The Higher Education Act is normally reauthorized every five years, but has been stalled under the House and Senate’s consideration for the past few years.

Orfield predicted the congressional session will adjourn in October, and hopes it will be done by then.

“I do feel it’s a top priority for this fall,” he said. “I think once we get past the work on the relief for the victims of Katrina Ö it will be a very high priority.”

Alexa Marrero, press secretary for the House Committee for Health, Education, Labor and Pensions, said an extension was passed last year that expires Sept. 30.

“If the legislation is not reauthorized before that date, I would expect another extension of the programs,” she said.

Orfield said it is highly unlikely but possible that the reauthorization will be completed by Sept. 30.

If the entire Senate approves the bill and the House approves its own version of the bill, which was passed by a House committee in late July, both bills will be taken to a congressional conference. The House and Senate will then work out the differences in the bills and approve a final bill to send to the president.

Orfield said there are a few differences between the Senate committee’s bill and the House committee’s bill.

“There are some differences in terms of how programs are funded, particularly about how the loan programs are handled,” he said.

Changes in how student loans are processed and reducing administrative costs should consequently increase loan availability to students who need them, Orfield said.

The rationale behind the amendments to the Higher Education Act fall into three broad areas, he said.

The changes aim to maintain access to financial aid programs for students who need assistance and expand opportunities for not only traditional students, but also for those who would like to go back to school for an advanced degree, he said. Also, the changes aim to reduce costs of the program without sacrificing availability to students who need it, Orfield said.

Kris Wright, director of financial aid for the University, could not be reached for comment.