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Jul 28, 2014  |  PERMALINK »

House Package of Higher Education Bills Tackles Critical Issues; More Work Needed to Improve Access and Success for Low-Income Students

By Amy Ellen Duke-Benfield, Tim Harmon, Evelyn Ganzglass, and Elizabeth Lower-Basch

Last week, the House passed four bipartisan higher education bills critical to low-income, non-traditional students. Unlike the Senate, the House Education and Workforce Committee is taking a piecemeal approach to reauthorizing the Higher Education Act, and these bills are part of that plan. The bills address a number of CLASP’s higher education objectives—such as increasing data transparency for students, better targeting of education tax credits to low-income students, and providing greater means for students pursuing competency-based education—but do have shortcomings, particularly for the growing proportion of non-traditional undergraduate students.

H.R. 4983 – Strengthening Transparency in Higher Education Act, passed on Wednesday, would “provide students and families with the information they need to make smart decisions about higher education,” according to Subcommittee on Higher Education and Workforce Training Chairwoman Virginia Foxx. The legislation creates a consumer-tested College Dashboard website that would replace existing Department of Education consumer websites, including the College Scorecard and College Navigator.  The legislation would include two major improvements in currently available consumer information for postsecondary students. First, graduation rates would be publicly reported (not simply disclosed as under current law) for Pell Grant recipients, subsidized Stafford loan borrowers, and students not receiving any federal aid.  Second, the graduation rate data would be provided for non-first-time students, in addition to first-time students, as is currently reported in the Integrated Postsecondary Education Data System IPEDS

In spite of these improvements, a critical shortcoming of the legislation is its approach to post-graduation employment and earnings results.  The bill contains only a requirement to include a link to “national and regional data from the Bureau of Labor Statistics on starting salaries in all major occupations.”  While national and regional salary survey data can be an important part of the context for interpreting post-graduation earnings results, these data alone are hardly a substitute for institution and program-level employment and earnings results for actual graduates.

The Center for Postsecondary and Economic Success at CLASP recently published a working paper on the importance of employment outcome data in improving the transparency of postsecondary education and training. A key finding of this report is that consumers want to know about the post-graduation employment and earnings for recent alumni of postsecondary institutions, because increasing their prospects for stable employment and improved earnings are central to their motivation to enroll in postsecondary instruction.  Leaving students, parents, and the public in the dark about these results would be a big setback for the cause of improved transparency and consumer awareness. 

H.R. 3136 – The Advancing Competency-Based Education Demonstration Project Act, also passed last week, directs the Secretary of Education to implement demonstration projects to explore ways of delivering education and disbursing student financial aid that are based on learning rather than time. The Act authorizes the Secretary to waive statutory and regulatory requirements related to a minimum number of hours of instruction and other restrictions that impede creation of competency-based programs and to conduct an annual evaluation of the demonstration programs.  This legislation is consistent with CLASP's call for a national conversation about moving to a competency-based education, training and credentialing system. 

The House also passed H.R. 4984 – The Empowering Students Through Enhanced Financial Counseling Act,  which requires students participating in federal loan programs to receive counseling each year at the beginning or prior to accepting the student loan and when they exit their program. In addition, it adds to the information that must be provided to students as part of loan counseling. It also requires institutions of higher education to provide financial counseling to Pell Grant recipients.

Finally, H.R. 3393  The Student and Family Tax Simplification Act, which was passed on Thursday, would consolidate four existing education tax credits, including the Hope Credit, the Lifetime Learning Credit, the American Opportunity Tax Credit (AOTC), and the tuition and fees deduction, into one permanent AOTC. When this bill was introduced last fall by Reps. Diane Black (R-TN) and Danny Davis (D-IL), CLASP along with our partners in the Higher Education Tax Reform Consortium had applauded it as an important step forward in simplifying the multiple tax benefits that support higher education and in making these credits more useful to low-income students.  H.R. 3393 would make permanent the partially refundable AOTC and would increase the portion of the credit that is refundable. In addition, it would improve coordination between Pell grants and the AOTC and would ensure that Pell grants are never counted as taxable income. Under the original bill, the costs of the expanded refundability would have been offset by lowering the income eligibility limits for the AOTC and by eliminating the Lifetime Learning Credit. When the bill was brought to the House Ways and Means Committee in June, Chairman Dave Camp (R-MI) amended it to restore the current income limits, which would keep the credit available to higher-income families and increase the cost of the bill by $60 billion over 10 years. The Ways and Means Committee also approved a series of costly bills that would make permanent corporate tax preferences. CLASP has deep concerns about this piecemeal approach, which will make it harder for Congress to eventually come to agreement on a balanced package that includes tax reform and sequester replacement. Moreover, to the extent that new funds are available for higher education, we would prefer as much as possible of these funds to be provided through Pell Grants, rather than tax credits. For more information about this bill, see CLASP’s “Education Tax Credits Bill Takes a Partisan Turn on Way to House Floor.”

CLASP looks forward to working with Congressional staff to improve upon the bills as part of a comprehensive reauthorization of the Higher Education Act.

Jul 23, 2014  |  PERMALINK »

Education Tax Credits Bill Takes a Partisan Turn on Way to House Floor

By Elizabeth Lower-Basch

This week, the House of Representatives is expected to take up H.R. 3393, the Student and Family Tax Simplification Act.  When this bill was introduced last fall by Reps. Diane Black (R-TN) and Danny Davis (D-IL) , CLASP along with our partners in the Higher Education Tax Reform Consortium had applauded it  as an important step forward in simplifying the multiple tax benefits that support higher education and in making these credits more useful to low-income students.

In particular, the bill includes a number of provisions consistent with the Consortium’s recommendations:

  • It would make permanent the partially refundable American Opportunity Tax Credit (AOTC), which is currently scheduled to revert to the non-refundable Hope credit at the end of 2017.  It would also index the value of the AOTC to inflation, starting in 2018.
  • It would Increase the portion of the credit that is refundable. Under current law, students who don’t earn enough to owe federal income taxes can receive only up to 40 percent of the AOTC as a refundable credit.  In other words, students who qualify for the maximum $2,500 credit can receive up to $1,000 as a refundable credit.  The bill would make the first $1,500 of the credit refundable.  This would particularly help students attending the lowest-cost institutions, such as community colleges, who now do not receive even the full $1,000 refundable credit if they have less than $4,000 in qualified expenses.
  • It would improve coordination between Pell grants and the AOTC, and would ensure that Pell grants are never counted as taxable income, even when they are used for educational costs other than tuition.   A similar proposal is in President Obama’s budget.
  • Under the original bill, the costs of the expanded refundabilty would have been offset by lowering the income eligibility limits for the AOTC and by eliminating the Lifetime Learning Credit.

Read more>>

Jul 22, 2014  |  PERMALINK »

The Workforce Innovation and Opportunity Act Becomes Law; CLASP Looks toward Implementation

By Marcie Foster, Kisha Bird and Evelyn Ganzglass

On Tuesday, July 22, President Obama signed into law the Workforce Innovation and Opportunity Act (WIOA), enacted by large bipartisan majorities in both the House and the Senate, after 11 years of debate to reauthorize the Workforce Investment Act of 1998.The White House is also releasing its Ready to Work: Job-Driven Training and American Opportunity plan to expand pathways to the middle class. The plan includes expanding many effective strategies CLASP has promoted that better prepare disadvantaged adults and youth to be successful in the workplace.

At a time of sustained unemployment in many communities, the programs in WIOA are designed to help young people and adult workers prepare for work or further education, find jobs, and build the skills employers need. We applaud Congress for acting with near unanimity in taking this important step to create a workforce development system that better enables states and communities to connect low-income youth and adults to employment and training opportunities that lead to economic prosperity for themselves and their families. And we thank President Obama for moving so quickly to enact this law.

Key themes in the bill include:

  • An emphasis on the alignment of all core programs authorized in the bill, including a requirement for unified planning and reporting on a shared set of performance measures across these programs. These steps offer the potential for streamlining and significantly improving service delivery to participants, particularly low-income, low-skilled individuals.
  • A heightened focus on providing training and helping participants prepare for postsecondary education to improve their success in the labor market.
  • Greater focus on and new vehicles for addressing the needs of youth and adults who have significant barriers to employment.
  • Strong support for implementation of innovative adult education models such as integrated education and training, career pathways and sector strategies.
  • A recognition—through  the incorporation of measureable skill gains as an interim indicator of progress and required use of a performance adjustment model—that some workers will need more intensive assistance and additional time in the core programs.

CLASP will be releasing a detailed analysis of WIOA’s implications for low-income and low-skilled youth and adults in the coming weeks. We anticipate working closely with leaders and advocates in states and local communities over the coming year to support the implementation and expansion of workforce systems, policies, and practices that are grounded in research and experience, while also improving the education and employability of low-income people.  In addition, we will work to ensure that newly designed regulations fully implement the bill’s focus on serving America’s most vulnerable workers.

Specifically, we will work collectively to ensure that, through implementation:

  • States and localities leverage the unified planning requirement to partner with key education and human service systems to better address the needs of individuals with barriers to employment. 
  • Performance metrics will improve services to those with barriers rather than be a disincentive.
  • Effective employment and education strategies, such as integrated education, career pathways, and transitional jobs are implemented at scale.
  • Low-income individuals and out-of-school youth are a priority for the provision of services, as intended in the legislation.
  • The provision of youth services maximizes opportunities to better serve older youth ages 16 to 24 across Title I and Title II.

While the passage of WIOA is an historical and significant event, a key next step will be to increase the capacity of the workforce development and adult education systems to achieve the goals of WIOA. Congress should strengthen its commitment to the nation’s workers by providing adequate resources to ensure that improved services reach those who need them. Although modest increases in funding for core programs are authorized in the bill, programs suffered such damaging recent cuts that the FY2017 authorized funding levels in the bill would only restore funding to FY2010 levels. For workforce development programs to have a substantial impact on the country’s unemployed and low-skilled workers, Congress must take steps to eliminate sequestration and the budget caps, both of which are dampening the economic recovery.

Leading up to WIOA’s implementation date of July 2015, the Departments of Education and Labor will be developing regulations and guidance for states and local communities on how to implement the new law. CLASP commends Congress and the Congressional staffers who worked on this important bill and we look forward to working with federal officials, states and local communities to strengthen existing programs and take advantage of the opportunities set forth in the bill to better serve low-income and low-skilled workers. 

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