NAICU Washington Update

College Cost Provisions Outweigh Benefits of House Reconciliation Bill

July 18, 2007

The House Education and Labor Committee approved a budget reconciliation bill on June 13 that moves more than $18 billion from loan programs to Pell Grant increases, need analysis changes, loan limit increases, and several other education programs. The Perkins capital fund would receive $100 million a year for five years. The savings from the loan program would also help to offset the costs of the interest rate reductions that were part of the House Democrats’ “Six for ’06” legislative agenda. (See WIR - 1/29/07.)

Unfortunately, the bill's benefits are outweighed by a number of unacceptable price provisions. Of particular concern are provisions that would:
  • Withdraw LEAP funds from states that fail to maintain a specified level of support for their public institutions of higher education.  Although this proposal targets state legislatures, it hits students—including those attending private institutions.
  • Tie “bonus” Pell Grant funding to institutions that either keep their net tuition increases below the Higher Education Price Index or offer guaranteed tuition plans. This sets an alarming precedent by using the federal aid program to dictate institutional pricing policies.
  • Require institutions that increase net tuition above the Higher Education Price Index to submit to the Secretary of Education a detailed report on the causes for the increase and the institution's “cost containment strategies” for lowering prices.  This provision was in the Higher Education Act reauthorization bill considered by the House last year. It was one of the measures that NAICU succeeded in having the Republicans remove, on the basis that it was a price control.Committee Chairman George Miller (D-CA) is aware of the higher education community’s concerns, and has indicated his willingness to further discuss these issues before the measure is considered by the full House.In general, voting on the reconciliation bill largely split along party lines, with all committee Democrats, along with three Republicans, supporting the final measure. Democrats emphasized the student benefits provided by the bill, while Republicans argued that the loan-program cuts were too deep. Republicans also expressed concern that, in effect, the bill would give entitlement status to programs that have traditionally been funded through the annual appropriations process.  

MORE News from NAICU