NAICU Washington Update

Legislative Frenzy to Continue into the Fall

August 07, 2007

July was a busy month in Washington, with Congress acting on legislation in almost every issue area of importance to private colleges, moving bills that we have been working on for months - if not years, in some cases - and taking one almost all the way to conference.

In July, both the House and Senate passed higher education reconciliation bills, the Senate passed its version of the Higher Education Act (HEA) reauthorization, and the House passed its education appropriations bill. Also, nearly every week since May has been filled with rumors of a pending HEA tax bill in the Senate Finance Committee, with action now expected in the fall.


As late as July 24 - just two weeks after the Senate passed reconciliation, and one week after it passed its HEA reauthorization bill - rumors were flying around Washington about the prospects of conferencing reconciliation and sending it to the president before the August 3 recess.

Now, as the August recess begins, it is clear that the reconciliation bill will be near the top of the congressional agenda when members return after Labor Day. Leading the conference negotiations will be the House and Senate education committee chairmen, Rep. George Miller (D-Calif.) and Sen. Ted Kennedy (D-Mass.). It is unclear who else from the committees is involved in conversations.

The bill is considered the first part of HEA reauthorization, done as separate budget legislation to speed its consideration in both chambers. At its core, the bill cuts student loan subsidies to lenders, and then uses the funds to boost student aid funding.


Also on the agenda for the fall will be finalizing the FY 2008 education appropriations bills. NAICU supports the House bill, which includes a $390 increase in the Pell Grant maximum, to $4,700; no cuts to SEOG and LEAP, and increases in TRIO and GEAR UP. The Senate bill, which has not reached floor consideration yet, maintains a level Pell Grant maximum at $4,310; with no cuts to SEOG and LEAP and increases in TRIO and GEAR UP. Senate appropriators had $2 billion less than the House to work with when writing their education and health bill, and are counting on the reconciliation bill to further increase need-based aid for low-income students.

It will be difficult for senators to find floor time in September for the education appropriations bill, with the release of the GAO and White House reports on Iraq. Because FY 2008 begins on October 1, Congress most likely will have to enact a series of continuing resolutions before finalizing an omnibus package in December. As a plan for moving the annual appropriations bills, this is the farthest from ideal the Democrats could want, in their new leadership positions. But with veto threats from the administration on all domestic bills, and the Senate floor being held up by delay tactics, this seems to be the only way out for appropriations bills this fall.


This fall also will see action on a higher education tax bill. The Senate Finance Committee has been working on a $20-25 billion tax package that would combine popular higher education tax incentives - Hope and Lifetime Learning credits, and the tuition deduction - into a single "super credit."

However, to help pay for the bill, the committee has been considering limits on the benefits under IRC Sec 117 (d) - the tax-free treatment of tuition remission - and implementing a "price control" from the tax side. These proposed controls would limit the amount of tax-exempt bonds a college can offer, or would require an annual 5 percent endowment payout if an institution's tuition increases above a certain benchmark.

NAICU is working closely with finance staff to ensure that whatever bill is considered is generous to students and families, but puts as little burden as possible on our institutions. We also have undertaken intensive efforts to avoid these problematic offsets, through appeals from selected presidents in key senators' states, and continuing work with committee staff as they write the bill. There are indications that these efforts are being felt.

Even more importantly, Congress must take action before December 31 to ensure that the soon-to-expire IRA Charitable Rollover and tuition deduction for families remain in place. NAICU is working with both chambers to get these important provisions extended.

Higher Education Act Reauthorization

The House education committee staff will soon be putting together its HEA reauthorization bill - at the same time it is supposedly putting together "No Child Left Behind," the reauthorization of the Elementary and Secondary Education Act.

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