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In Focus: Federal Postsecondary Policy

Dec 15, 2014  |  PERMALINK »

“CRomnibus” for FY 2015—What It Means for Low-Income People in Postsecondary Education and Training

By Amy Ellen Duke-Benfield and Katherine Saunders

On Saturday night, the U.S. Senate joined the House in passing a spending bill (referred to as the “CRomnibus,” a hybrid of a continuing resolution and an omnibus budget bill) for the remainder of the fiscal year through September 30, 2015, that would provide modest increases to student aid and workforce training programs, while unfortunately cutting Pell Grant funding (the largest federal grant program for low-income undergraduate students).

  • Pell Grants: Pell Grants received a $100 increase in the maximum annual award from $5,730 to $5,830 for the 2015-16 academic year. However, Pell Grant funding was cut by $303 million, $219 million of which will partially replace mandatory funds for private student loan servicers that were eliminated in a previous budget agreement. The cut will not lead to harmful eligibility changes to the program in the current academic year because the Pell Grant program is currently running a surplus. But, the program is projected to face a significant shortfall in FY 2016 and beyond. In the past, shortfalls have harmed non-traditional students because of eligibility changes that have included setting a cap on the number of semesters for receipt of Pell Grants and eliminating summer Pell awards. Cutting the program funding now, instead of saving the current surplus for future leaner years, sets a dangerous precedent for the program.
  • Ability to Benefit: This bill partially reinstates the ability-to-benefit (ATB) provision, which provides Pell Grant and student loan access to low-income students who lack a high school diploma or equivalent and who enroll in a career pathways program, enabling them to receive student aid by passing an exam or successfully completing six credit hours. The change goes into effect immediately, but the amount of Pell Grant for which ATB students will be eligible varies based on enrollment date. Those who enter a career pathways program before July 1, 2015, will be eligible for the maximum Pell Grant award of $5,830, while those enrolling after July 1, 2015, will be limited to only the maximum discretionary Pell Grant award of $4,860.
  • WIOA Title I Funding:  State grants for adult, dislocated workers and youth training and employment services were increased by a total of $36 million over the prior year’s appropriated level, with the increased amounts allocated to Governors’ reserve funds for statewide employment and training activities.
  • Adult Education:  The bill increases adult education state grants by $5 million over the prior year’s appropriated level, an increase of 0.9 percent.
  • Federal Work-Study:  Federal work-study (FWS) helps needy students obtain part-time employment to cover the cost of their education. FWS funding increased by $15 million over the prior year’s appropriated level, which will assist an additional 8,900 students.
  • Foster Youth: A box will be added to the Free Application for Federal Student Aid (FAFSA) to identify students who are foster youth or were in the foster care system, so that the U. S. Department of Education can use that information to notify students about their potential eligibility for student aid, including postsecondary education programs through the John H. Chafee Foster Care Independence Program.
  • Minority-Serving Postsecondary Education Institutions (MSIs):  Programs to support MSIs received additional funding of $8.7 million over the prior year’s appropriated level, an increase of 1.6 percent.
  • Trade Adjustment Assistance (TAA) for Workers:  The bill extends the TAA programs through fiscal year 2015 with $710.6 million in funds expected to serve 17,300 new participants.

 

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.

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