Advocacy quick hits
Editor’s note: This weekly update from the government relations office at the American Association of Community Colleges (AACC) provides the latest on what’s happening in Washington and how AACC is advancing policies to support community colleges and students. Send questions, feedback and more to: opens in a new email@example.com new email.
- opens in a new windowDepartment of Education issues final Gainful Employment rule
- opens in a new windowGovernment shutdown looks all but certain
- opens in a new windowTax-Free Pell Grant Act introduced in the Senate
- opens in a new windowFunding opportunities and resources
On Wednesday, the Department of Education (ED) released final regulations for Gainful Employment (GE) programs and the accompanying reporting requirements for a new Financial Value Transparency (FVT). The official version of the regulations will be published in the Federal Register in October, but an opens in a new windowunofficial version has been posted online.
The GE rules build off the regulations promulgated by the Obama Administration, creating an eligibility framework that holds certain career-oriented programs to performance standards, including a debt-to-earnings (D/E) measure. However, the Biden Administration rules will also require GE programs to meet a new earnings premium (EP) metric, comparing the earnings of program completers to the average earnings of high school graduates aged 25-34 in the state. If programs fail to meet the standards on the same metric twice in a three-year period, they will lose their Title IV eligibility. At community colleges GE programs encompass all Title IV-eligible certificate programs.
In June, AACC filed extensive commentsopens PDF file on the proposed GE rules, expressing support for the D/E measure but opposing the new EP metric. These concerns focused on the new compliance burden for institutions, regional variations in earnings within states that make a single earnings standard inequitable, and the challenges of fairly treating for low-wage but high-social value fields.
The Financial Value Transparency regulations represent the most significant change in higher education transparency and accountability in recent years, creating a new framework for institutional reporting, federal disclosures, and program assessment. The new FVT framework would calculate D/E and earnings premium measures for virtually all eligible programs at Title IV-participating institutions, regardless of whether they are GE programs. This information will be available on a new public-facing website. In a change from the proposed regulations, ED will only require GE, certificate, and graduate programs to inform students if they fail to meet either the D/E or EP measures. Other undergraduate degree programs are given a pass.
As AACC’s David Baime and Alexis Gravely opens in a new windowoutlined in May, the vast majority of covered community college programs will not be at risk of losing their eligibility due to the new GE metrics (per estimates from ED). However, the compliance costs and administrative burden will be significant.
Lawmakers in the House and Senate are still at an impasse in advancing a short-term funding bill – called a continuing resolution (CR) – to avoid a partial government shutdown. September 30 marks the end of the fiscal year 2023 (FY 23), with funding for the federal government set to expire, along with authorizations for the Farm Bill and FAA reauthorization. With no signs of progress in crafting a bipartisan funding extension, a shutdown looks all but inevitable.
The political dynamics for an FY 24 funding deal have been opens in a new windowextremely difficult. The Senate has advanced twelve bipartisan funding bills that adhere to the funding cap amount agreed to in the debt ceiling deal. House conservatives have pushed for domestic spending reductions that go beyond that. However, they have been unable to advance their appropriations bills due to disagreements within the Republican Caucus about the severity of the cuts and the inclusion of conservative policy riders.
These central rifts have spilled over into the CR debate as well. The Senate has scheduled a procedural vote on a bipartisan stopgap funding bill to keep the government open through November 17. The Senate proposal is a “clean” CR – meaning it maintains FY 23 funding levels – but includes an extra $6.15 billion in funding for Ukraine and $5.99 billion for FEMA disaster relief efforts. House Speaker Kevin McCarthy (R-California) has said he will not consider taking up the Senate’s CR unless it includes additional border security measures. At the same time, funding for Ukraine is unacceptable for many on the far right. A previous CR proposal floated in the House would have cut spending 8 percent below FY 23 levels, but even this plan did not receive enough Republican support to be viable. With impasses over overall spending, funding for Ukraine, and border security policies, it is hard to see a path forward in the next few days.
A government shutdown will impact government staffing, program administration, and the distribution of public benefits. All non-essential federal personnel would likely be furloughed, including those at the Department of Education (ED), Department of Labor (DOL), and other federal agencies that work closely with community colleges.
Administration of federal financial aid should continue as usual. However, community colleges should expect disruption to institutional grant administration and decreased technical assistance and support from federal agency officials, due to staffing constraints. This could prove particularly disruptive for financial aid administrators working with ED to be ready to implement the new 2024-25 FAFSA and aid calculation and for borrowers reentering repayment in October. Finally, if the shutdown lasts longer than 30 days, many students who rely on public benefits programs, especially the Supplemental Nutrition Assistance Program (SNAP), will see their benefits reduced or eliminated. In that instance, colleges should expect an increase in students taking advantage of campus food banks or other community resources.
On Tuesday, Sens. Sheldon Whitehouse (D-Rhode Island), Chuck Grassley (R-Iowa), and Ron Wyden (D-Oregon) introduced the opens in a new windowTax-Free Pell Grant Act (S. 2920) on a bipartisan basis. Each of the sponsoring members sits on the Senate Finance Committee, which has jurisdiction over tax policy, with Sen. Wyden serving as the committee’s chair. A opens in a new windowHouse version of the bill (H.R. 3000) was introduced in April by Reps. Lloyd Doggett (D-Texas) and Mike Kelly (R-Pennsylvania).
Under current tax code, Pell Grants are classified as “scholarships.” This means that students are taxed on any Pell Grant funds used to pay for expenses beyond tuition and fees. For students attending low-cost institutions like community colleges, this effectively reduces the size of their Pell Grant and takes away resources to help pay for the non-tuition costs central to student success – including food, housing, transportation, and childcare. From AACC’s perspective, this policy makes no sense.
The tax classification of Pell Grants also interacts with eligibility rules for the $2,500 American Opportunity Tax Credit (AOTC), available to help offset the costs of college for families making up to $180,000 a year. If a student receives a Pell Grant, the award amount is subtracted from their eligible AOTC tuition and qualified expenses. At community colleges, where a student’s Pell Grant often exceeds their tuition and fees, the student would become ineligible to claim the AOTC despite having demonstrable financial need.
The Tax-Free Pell Grant Act makes Pell Grants fully non-taxable and alters the AOTC eligibility rules to ensure that low-income students attending low-cost institutions have more equitable access to the benefit. As these issues primarily affect community college students, the bill is a top legislative issue for AACC and the association is working closely with its members to ensure enactment.
Applications are open for key community college funding opportunities:
- opens in a new windowAdvanced Technological Education (ATE) – Due October 5
- Perkins Innovation and Modernization Grants – Due October 12
- opens in a new windowStrengthening Community College Training Grants – Due November 14
For more detailed information on these issues, visit the Community College Advocacy Updates page on our website.