Reps. Virginia Foxx (R-NC) and Brett Guthrie (R-KY), the chairs of the House Education and the Workforce Committee and the Subcommittee on Higher Education and Workforce Training, respectively, introduced comprehensive Higher Education Act (HEA) reauthorization legislation on December 1. The PROSPER Act, H.R. 4508, is expected to be marked up (i.e., amended and voted on) by the committee before Christmas, but no date has been set. Major features of the legislation impacting community colleges and their students are as follows:
Federal Pell Grant Program
Programs that are 300 to 599 clock hours in length or its equivalent (e.g., one third to two thirds of an academic year) would now be eligible for Pell Grants and other Title IV student aid programs. New Pell Grant support for shorter length programs has been one of AACC’s highest reauthorization priorities. (Some current proposals would cover programs as short as 150 hours or its equivalent.)
A $300 annual increment (not indexed to inflation) would be provided to students who take 15 credits a semester, and 30 for a full academic year. While this would benefit many students, others who cannot manage the additional course load will no longer qualify for the largest grant.
No provision was made in the legislation for annual increases in the Pell Grant maximum award outside of the appropriations process. AACC has supported indexing the maximum grant to the consumer price index, as was done for 5 years earlier this decade.
The current 12-semester limit on Pell Grant eligibility has been retained. AACC continues to support extending the limit to 14 semesters.
Title IV Refunds/Risk Sharing/Student Aid Disbursements
The current law on Title IV refunds would be overhauled. Students would “earn” their Title IV aid at increments of 25% of the period of enrollment. A student who completed less than 25% of the period of enrollment would earn no federal student aid; the student who completes 25% would earn 25% of the student aid. Consequently, only students who complete the entire term would earn 100% of their aid. Under current law, students who complete 60% or more of the term receive the full amount.
In a new twist on risk sharing, colleges would be required to return to the federal government any Title IV funds that the student received but had not “earned.” Given student enrollment patterns, the PROSPER Act would appear to have a particularly strong negative impact on community colleges. AACC is conducting further analysis on the impact of this provision.
Colleges would be required to award federal student aid “like a paycheck,” in equal installments each week or month (but allowing for upfront costs such as tuition, making the impact of the language unclear). Colleges would be authorized to assess students 10% of the amount that they must return to the federal government.
Federal Loan Programs
The Federal Loan Programs would be renamed the Federal ONE program. The existing in-school interest subsidy for undergraduate students who have demonstrated financial need would be eliminated.
As strongly supported by AACC, student aid officers would be given discretion to reduce loan maximums for broad categories of students. The language is not quite as expansive as AACC has sought, but would go far to give colleges greater control over student borrowing for various groups of students. Grounds on which loans could be limited:
- Student debt levels that are excessive for program graduates (using Bureau of Labor Statistics regional average starting salary data)
- Enrollment intensity (less than full time)
- Credential level (degree or certificate)
- Year of program
Institutional cohort default rates and related sanctions would be replaced by program-level loan repayment rates, i.e., the percentage of a program’s students who are in positive repayment (generally speaking, not delinquent more than 90 days). Programs with loan repayment rates below 45% for three consecutive years would lose Title IV eligibility. If a program has fewer than 30 students, a 3-year average is used. The full implications of this enormous change are not clear. Existing language that provides protection from sanctions for colleges that have relatively few borrowers, the “participation rate index,” would be adapted to the new repayment rate framework.
A single Income-Based Repayment (IBR) program would be created. There would be no loan forgiveness after a certain number of years of repayment, as under current law, but once an individual has paid all that they would have under the standard 10-year amortization, the obligation would be retired. The Public Sector Loan Forgiveness Program would be eliminated.
New statutory provisions on borrower defense to repayment are provided in the bill, and Obama Administration regulations would be formally repealed.
Campus-Based Student Aid Programs/Federal Work-Study
The Supplemental Educational Opportunity Grant (SEOG) program would be eliminated. The legislation would amend the formula used to distribute funds to colleges for the Federal Work- Study Program (FWS) in a fashion that should benefit community college students. A small percentage of funds would be allocated to colleges that graduate relatively high numbers of Pell Grant recipients. The community service requirement in FWS would be eliminated; priority would be given to work-based learning opportunities.
The PROSPER Act would authorize the continuation of the TRIO programs, but would make several significant changes. It would replace “prior experience” with “accountability for outcomes” and prohibit absolute, competitive, or other preference priorities to be used in awarding these funds. Ten percent would be set aside for new applicants. The bill also would mandate the addition of a 20% matching requirement for all TRIO programs that would have to be provided using institutional or other non-federal funds.
Competency-Based Education (CBE)
CBE gets a huge boost in the legislation through a new definition clearly designed to expand its coverage under the Title IV student aid programs. The detailed language is designed to ensure that any federal funding for competency-based funding covers only education that is actually delivered by an institution, and that the competencies are measured accurately. Accreditors would be given substantial responsibility in this regard.
All students who lack a high school diploma or its equivalent would become eligible for Title IV provided that they successfully take six credits at an institution. This eligibility was terminated in FY 2012 funding legislation, and restoring it has been a top AACC priority.
Title III and Title V – Institutional Aid
The Strengthening Institutions (Title III-A) program, a community college mainstay, would be eliminated. Committee staff have indicated that this was done to provide funding for the new apprenticeship program (see below). A new feature of the Hispanic-Serving Institutions (HSI) and Predominantly Black Institutions (PBI) programs, among other institutional aid programs, would require that grantees have a 25% completion rate, including transfers out for which substantial preparation is provided.
A new grant program emphasizing apprenticeships would be created, replacing teacher training programs in Title II of the HEA. The maximum award under this new program would be $1.5 million and would be awarded on a competitive basis to industry-college partnerships. Federal funds would cover 50% of costs, as well as 50% of student wages. For community colleges, federal funds would be particularly helpful in paying for equipment.
Critically, “student learning and educational outcomes in relation to the institution’s mission” would become the sole criterion that accreditors would be required to focus upon in order to be recognized by the U.S. Department of Education (ED) secretary. This would replace the current “student achievement” as the first of 10 standards that agencies had to meet.
The statute appears to give institutions a new role in defining for themselves the student achievement above, if the agency allows it; the agency itself can promulgate standards.
Transparency/Graduation Rates/College Dashboard
The current annual institutional graduation rate disclosure—150% of the “normal time” to completion—would be eliminated. Instead, ED would create a new College Dashboard to replace the current College Navigator. (Incidentally, ED would be specifically barred from creating a college ratings system.) The Dashboard would present graduation rates of 100%, 150%, and 200% of the “normal time” to completion, but not the 300% sought by AACC—a major negative. The legislation mandates that earnings information be provided for each program, at 5 and 10 years after graduation, derived from program completers who receive federal aid (circumventing the continued ban on the creation of a federal unit record data system). Information on student debt also would be provided.
For-Profit Colleges/”Single Definition” of Institution of Higher Education
The legislation would give for-profit colleges the same statutory status as non-profit institutions of higher education through creation of a “single definition” of institution of higher education. This has been a longstanding objective of the for-profit sector. In addition, the current “90/10” rule, which requires that for-profit institutions derive at least 10% of their overall funding from non-Title IV sources, would be eliminated. AACC has taken the position that this modest requirement for non-federal student aid revenue at for-profits should be retained, if not strengthened.
The HEA’s gainful employment language (GE) would be eliminated. GE regulations promulgated by the Obama administration have been extremely controversial within the for-profit sector, and were quite burdensome and costly to many community colleges. However, they clearly resulted in the closing of many subpar programs in the for-profit industry.
The current state authorization regulations would be repealed and the government would be barred from regulating in this area. The law clarifies that, for federal purposes, the institution is located only where it is physically present.
The legislation would eliminate some of the HEA’s reporting and regulatory requirements, as supported by AACC. New requirements would be placed on the Department of Education’s ability to regulate, with tight Congressional oversight.
Free Speech Protections
“No institution of higher education shall be eligible to receive funds under this Act … unless the institution certifies to the Secretary that the institution has annually disclosed to current and prospective students any policies held by the institutions related to protected speech on campus, including policies limiting where and when such speech may occur.”
Campus Climate Surveys would be required not less than every 3 years. The legislation states that the contents are not mandatory, though the education secretary is required to develop sample surveys. Colleges would be required to retain the services of qualified sexual assault survivors’ counselors, and must develop a one-page form for guidance to students who may be victims of sexual assault. The legislation requires the secretary to develop model forms. Colleges would be encouraged but not required to enter into MOUs with law enforcement agencies with primary jurisdiction.
For more information on the legislation, contact David Baime, Senior Vice President for Government Relations and Policy Analysis, firstname.lastname@example.org, or Jim Hermes, Associate Vice President for Government Relations, email@example.com