NAICU Washington Update

NAICU Board More Cautious on Student Aid Bill

December 18, 2009

The changing landscape on the president's student aid initiative was the dominant policy conversation during November's NAICU board and committee meetings in conjunction with the annual NAICU Fall Leadership Conference.  The policy committees spent many hours poring over both the policy and political dynamics during their two days of meetings.

Ultimately, the board continued to support the bill, but with less enthusiasm than at the Spring 2009 board meeting, when legislative details were less clear.

The greatest concern for the board was the controversial effort by Congress to use states as the primary vehicle in reaching the president's ambitious goal of being first in the world in national graduation rates by 2020.  Given the negative feelings many private colleges have over recent state cutbacks in student aid, and the lack of support for private college students via stimulus funds, committee members were especially annoyed that states would now be given responsibility for leading and organizing conversations on post-secondary improvement. An even more serious concern was how this new authority might be used to intrude into the affairs of private colleges.

The NAICU board ultimately recognized, though, that these important reservations were outweighed by the significant student aid funding in the bill, which would shore up the Pell Grant program and expand Perkins loans - programs of critical importance to low-income students in all sectors.  The key provision tipping the balance was the Rule of Construction in the House bill that protects private college autonomy.  This was buttressed by the promise from Senate staff that, although the Senate could not include such a provision under the Byrd Rule, they would remove any mention of private college participation in the state persistence program, so that private colleges could not be compelled to participate.  This means that private colleges, with the best completion rates with at-risk students of all sectors (see NAICU's 12 Facts), could be left out of state 2020 conversations and funding.  However, the higher principle of protecting private college autonomy would be preserved.

It is likely that the student aid bill in its final form will provide two pots of money to improve college completion. The smaller pot - around $1 billion - would fund a national competition, and NAICU is advocating that it be reserved for colleges and non-profit groups in a fair and open competition.  The second pot is likely to be twice that size, and would fund state-based conversations among early-childhood, K-12, and post-secondary education, along with labor.  These conversations are intended to break down the silos across these sectors, so that more students can get into and through the pipeline.  It is unclear if states would be required to fund any actual programs with this money.

All of this money, along with funding for community college, K-12 construction, early childhood, and Pell Grant and Perkins expansion, would come from the proposed conversion from FFELP to direct loans.

In the meantime, the bill still awaits final action on health care reform before it can move forward.  Another uncertainty is the vote count on the conversion to direct lending.  The tensions on the underlying direct loan issue were evident in a letter issued by House education committee chair George Miller (D-Calif.) and subcommittee chair Ruben Hinojosa (D-Texas), encouraging all college presidents to convert to direct lending now.  That prompted a counter letter by Senate education ranking member Mike Enzi (R-Wyo.), House ranking member John Kline (R-Minn.), and others reminding college presidents that no legislation had yet been passed on this mandate.

Meanwhile, everyone in the higher education community and in Congress agrees on one thing, if nothing else:  that the upcoming holiday break is welcome.

MORE News from NAICU