NAICU Washington Update

Congress Adopts Reconciliation for Student Aid

May 03, 2009

The House and Senate conference report on the congressional budget resolution (S. Con. Res. 13), approved on April 29, included reconciliation instructions for student aid - the budget mechanism that will allow savings from the student loan programs to go to increased Pell Grant funding.  By votes of 233 to 193 and 53 to 43, the House and Senate passed the non-binding resolution on President Obama's 100th day in office, setting the stage for a final push toward eliminating the bank-based student loan program in favor of direct loans.


For the president's higher education priorities, the budget resolution allows the education committees to move forward with legislation to restructure student aid.  The committees now have until October 15 to write a bill that will provide $1 billion in deficit reduction over the next five years.  The relatively small amount makes budget reconciliation possible.  But the real action will be the move to direct lending that is assumed in the resolution.  This conversion would allow an additional $94 billion in savings from the FFELP program to go into Pell Grants. (See earlier Washington Update story for a description of the president's plan.)

Congress made clear, in non-binding language included in the conference report, that it intends to work with all players in the student aid community as it writes this legislation.  The Sense of the Congress on College Affordability and Student Loan Reform states that:

"It is the Sense of the Congress that-

(1) nothing in the resolution should be construed to reduce any assistance that makes college more affordable and accessible for students, including but not limited to student aid programs and services provided by nonprofit State agencies and private lenders;

(2) private and non-profit lenders, originators, and loan servicers help students plan for, apply to, and pay for post-secondary education and training;

(3) any reform of the federal student loan programs to ensure that students have reliable and efficient access to federal loans should include some future role for the currently involved private and non-profit entities, including state non-profits with 100% FFEL lending in the State, and capitalize on the current infrastructure provided by private and non-profit entities in order both to provide employment to many Americans during this time of economic distress and to maintain valuable services that make post-secondary education more accessible and attainable for many Americans, and

(4) therefore, pursuant to any changes to the student loan programs, loan processing, administration, and servicing should continue to be performed, as needed, by for-profit and non-profit entities."

Next, the House Education and Labor Committee and the Senate Health, Education, Labor and Pensions Committee will draft legislation over the spring and summer.  We can then expect floor action to take place in October or November.  Floor debate will be limited under the special rules for budget reconciliation that prohibit filibuster, so only require 50 votes for Senate passage.  (See earlier Washington Update story on budget rules.) Conference will follow, making final passage likely before the December holiday break.

The next six to nine months will be an important time for NAICU presidents to be engaged in the legislative process so that the final bill increases student aid without sacrificing independent colleges' autonomy on such matters as flexibility in awarding institutional aid.

The NAICU board of directors and board committee members debated the benefits and risks of the president's proposal at their spring board meeting in late April.  The notes from those discussions have been distributed to all NAICU members.


Beyond reconciliation, the other important role of the congressional budget resolution is to provide the total spending amount to the appropriations committees.  The FY 2010 resolution provides $1.086 trillion in non-war discretionary funding - $10 billion less than the president's request - to be divided into the 12 subcommittee allocations by House and Senate appropriations committees. 

Congress is expected to meet the president's request of $556 billion for defense, leaving $530 for domestic priorities.  Of this amount, the budget plan assumes $89.4 billion for Function 500, the category that includes education, training, and social services.

Congress will receive the administration's detailed appropriations request the week of May 4.  Then the appropriations subcommittees will hold agency hearings, and will begin writing their FY 2010 spending bills.  NAICU works primarily with the Senate Appropriations Committee's Subcommittee on Labor, Health and Human Services, Education, requesting increased funds for the student aid programs. 

Along with the more than 60 organizations in the Student Aid Alliance, NAICU is requesting increases in the core student aid programs, anchored by a $5,550 Pell Grant maximum.

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