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In Focus: Federal Postsecondary Policy

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>>

Apr 2, 2014  |  PERMALINK »

Ryan Budget Offers Bleak Future for Aspiring Low-Income College Students

By Marcie Foster

This week the House Budget Committee, chaired by Rep. Paul Ryan (R-WI), released its vision for the FY15 federal budget.  For the fourth year in a row, the committee’s budget cuts off college access for millions of low-income students —undercutting the widely shared goal expressed in its title, Path to Prosperity. Moreover, it does so in a way that disproportionately impacts low-income, working adult students, many of whom are parents and must work while attending college.

While the budget summary notes that final decisions would be left to the committee, it outlines “illustrative policy options” that would:

  • Slash funding for the Pell Grant program, restricting access for low-income students in future years. The Ryan budget eliminates all funding for Pell from the “mandatory” portion of the budget, which would drive up the portion of the budget coming out of the capped discretionary fund and threaten aid availability to low-income students in the future. The Pell Grant program makes college a reality for nine million low- and moderate-income students and helps the U.S. build a more skilled and globally competitive workforce. Rep. Ryan’s proposal would undermine our nation’s skill-building efforts and economic growth at a time when projections estimate that, by 2020, nearly two-thirds of jobs will require at least some postsecondary education.
  • Threaten completion for low-income, working students by cutting off their financial aid if they attend less than half-time. The budget suggests eliminating aid eligibility for students who must reduce their course load to less than half-time (fewer than 6 credits) even when such a reduction is due to the unavailability of courses, changing work schedules, or family obligations. Less-than-half-time enrollment of low-income students is mostly temporary, and cutting off aid during semesters with lower course loads may make it impossible to enroll at all, threatening their ultimate completion. According to a Department of Education study, continuous enrollment significantly increases the probability that a student will complete a degree.
  • Restrict the purchasing power of the Pell Grant, putting college further out of reach for low-income students. Rep. Ryan proposes to freeze the maximum Pell Grant for the next 10 years, despite the fact that the purchasing power of Pell has eroded considerably over time. The award level that Rep. Ryan suggests ($5,730) is expected to cover less than one-third of the cost of college in 2014-2015—the lowest since the start of the program. By 2024, this same award level would only cover 20 percent of college costs.
  • Reduce aid eligibility of all types—including Pell Grants, student loans, and other aid—for some students by modifying the formula for calculating student aid. The budget suggests changing the aid eligibility formula in such a way that would restrict aid even further to low-income students, potentially increasing their unmet need (the difference between the costs of college and the amount of grant aid that the student receives). In 2012-2013, the average community college student already had more than $6,000 in annual unmet need. Policies that increase unmet need could result in students taking out additional loans to meet college costs or deciding to forgo college altogether.

Furthermore, Rep. Ryan claims that the Pell Grant program is on an “unsustainable” path. In fact, the program has seen a decline in costs since 2010, resulting in funding surpluses for the last several fiscal years. Program costs are expected to remain level over the next 10 years, after adjusting for inflation.

Due to the passage of the Bipartisan Budget Act in December 2013, which set spending levels for FY14 and FY15, the Ryan budget is unlikely to become law. However, it sets a dangerous and short-sighted example for future federal spending decisions.  We should be investing in America’s workforce not undercutting committed and hard-working students seeking greater opportunity through postsecondary education and economic success for themselves and their families.

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