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Key Education Reforms Included in Health Care Reconciliation Bill

Mar 30, 2010

Download a detailed summary of postsecondary provisions in HCERA (pdf).

By Amy Ellen Duke-Benfield

The Health Care and Education Reconciliation Act of 2010 (HCERA), a companion piece to the health care reform bill, includes provisions that would provide greater access to postsecondary education. President Obama signed the measure March 30.

HCERA saves money and provides resources for programs that increase access to postsecondary education by eliminating the Federal Family Education Loan (FFEL) program. Currently, the FFEL program guarantees and subsidizes federal Stafford loans for students and PLUS loans for parents issued by private student lending companies. The reconciliation act does away with these subsidies and, instead, allows the federal government to issue these loans through the Direct Loan program. This provision is estimated to save $61 billion over 10 years.

This saving allows the reconciliation act to expand access to postsecondary education by:

  • Increasing Pell Grants. The reconciliation act invests $36 billion in the Pell Grant program. It increases individual Pell Grant awards each year based on the Consumer Price Index beginning at $5,550 in 2013-2014 and maxing out at $5,975 four years later. The act also includes an investment of $13.5 billion to fund a Pell Grant shortfall, which makes the total HCERA investment in Pell $36 billion.
  • Increasing funding for the College Access Challenge Grant Program (CACGP). The reconciliation act provides $150 million per year from 2010 to 2014 to CACGP, a program established under the Higher Education Opportunity Act in 2008 that distributes grants to states to increase access for students who are underrepresented in postsecondary education. The federal government provides two-thirds of the grant, and states provide the remaining one-third.
  • Establishing funding for community college and career training grant programs. The reconciliation act appropriates $500 million each year over four years ($2 billion total) for a discretionary grant program within Trade Adjustment Assistance. Each state is to receive no less than $2.5 million each year to offer or improve an educational or career training program for workers who are eligible for services under Trade Adjustment Assistance, a program that provides aid to workers who have lost jobs due to increased imports.
  • Providing grants to institutions that predominantly serve minorities. The legislation provides $255 million to minority-serving institutions annually through 2019. Of that, $100 million is allocated to Hispanic-serving institutions, $100 million is allocated to historically black colleges and universities and predominantly black institutions, and $55 million is allocated to other minority serving institutions, including tribal colleges and institutions that serve Alaska Natives, Native Hawaiians, Asian-Americans, Native Pacific Islanders, and nontribal Native Americans.
  • Increasing assistance to borrowers through income-based repayment. Starting in July 2014, student borrowers eligible for income-based repayment of federally subsidized loans will pay only 10 percent of discretionary income instead of the current 15 percent, and their loans will be forgiven after 20 years, instead of the current 25 years.

HCERA includes a number of provisions that were originally part of the Student Aid and Financial Responsibility Act (SAFRA) that the House passed last fall. Unfortunately, it omits key elements of SAFRA. The original legislation would have invested more resources in education by establishing a grant program for early care and education, renovating public school facilities, and funding the American Graduation Initiative, a proposal that sought to increase the number of community college graduates by 5 million. Between September and March, however, SAFRA's revenue estimate dropped from $87 billion to $61 billion. In addition, congressional leaders allocated $10 billion to reduce the budget deficit and another $9 billion to help the combined legislation meet the budget reconciliation requirement of a net reduction in federal spending. 

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