NAICU Washington Update

Senate Completes Reconciliation in One Day

July 25, 2007

Sen. Edward Kennedy (D-Mass.), chair of the Health, Education, Labor and Pensions (HELP) Committee successfully propelled the Senate's higher education reconciliation bill to completion on July 19, garnering considerable Republican support along the way.

The Senate reconciliation bill (S. 1762) was substituted into the House reconciliation bill (H.R. 2669), and eventually passed 78 to 18.  Several relevant amendments, listed below, were considered – along with a session-extending list of non-germane Republican amendments and procedural votes.

The bill cuts more than $20 billion from lenders and loan guarantors to fund a number of student financial aid increases.  It funds a new Promise Grant program for low-income Pell Grant recipients; allows federal loan payments to be capped at 15 percent of borrower income; boosts the amount students can earn before their federal student aid is decreased, and provides loan forgiveness for public-service employees after 10 years of repayment.  It also provides funding for minority-serving institutions.

Lenders have complained that the cuts – especially on top of similar cuts last year – will cause smaller lenders to leave the program and will force remaining lenders to reduce the benefits they offer students.

NAICU and the rest of the higher education community sent letters to Sen. Kennedy in advance of floor consideration of the bill, supporting the increased funding for student aid. Click here for the Higher education community letter and here for the NAICU letter.     

Despite the bill's $17.3 billion over five years for need-based grant aid, NAICU and many others in the higher education community remain concerned about the structure and requirements of the new Promise Grant program.  Instead of directing savings to the Pell Grant program, as the House does, this program would have to be administered separately.  Grants would go only to the "most needy" students, with that term left undefined, and the Secretary of Education is given authority to establish the minimum and maximum grant awards.  In addition, the program requires that the funding must not replace federal, state, or institutional aid to students.

Outcome of Proposed Amendments to the Senate Reconciliation Bill

Murkowski – Provide $176 million for a college access partnership program; approved 73-24

Kennedy – Assure that student grant benefits extend through 2017; approved 52-45

Nelson-Burr – Reduce cuts in subsidy reductions to lenders; defeated 36-61

Sessions – Eliminate the loan forgiveness program for public service employees; defeated 42-55

Graham – Strike provision in the bill to eliminate the FAFSA drug question; approved by voice vote

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