NAICU Washington Update

Super Committee Declares Defeat and Goes Home

November 22, 2011

There was a final, frenzied last-minute effort over the weekend to work out a deal on $1.2 trillion in deficit reduction.  In the end, though, the bipartisan 12-member Joint Select Committee on Deficit Reduction (aka the "Super Committee") threw in the towel on Monday and headed home for the Thanksgiving holiday without an agreement.

Committee members from both parties had worked to convince their colleagues outside the committee to be more flexible, so that an agreement might be crafted.  But, ultimately, neither party's caucus would budge enough to make an agreement possible.  Stalwart anti-tax Republican Committee members searched for any willingness among colleagues to compromise on the long-standing "no tax increase" pledge among Republicans, but the answer was no.  On the other side of the aisle, Democrats remained adamant on sticking points such as adding the President's new jobs initiatives to the mix.

With no deal, the automatic budget cuts that were part of the Budget Control Act creating the Super Committee, will be triggered in FY 2013.  This will mean across-the-board cuts to defense and non-defense programs, doing what the Super Committee could not do.  But wait.  Given that FY 2013 is almost a year away, there is already buzz in Washington that Congress will continue to explore alternatives for reaching the deficit reduction goal.

What Does Sequestration Mean for Higher Education?

The effects of an automatic sequestration are not fully clear for higher education.  Most education programs - including SEOG, Federal Work Study, TRIO, GEAR UP and research - would be hit with an eight percent across-the-board cut.  Pell Grants, however, are specifically protected from sequestration.  With student loans making a profit for the federal government, it isn't quite clear how sequestration would affect that program.  There is widespread concern, however,  that Congress might try to wring even more funds from parents and students who borrow to go to college.

Going into the Super Committee discussions, NAICU's biggest concern was that the committee would make random cuts to student aid programs on top of the $30 billion in cuts already made this year.  Of even greater concern was that this might be done without careful review of eligibility formulas to ensure that the neediest students are not harmed. 

Since last spring, NAICU has been part of conversations with the education and funding committees in both the House and Senate on ways to trim the Pell Grant program without harming the neediest students who are most likely to succeed.  Education advocates on the Hill, in both parties, worried about the Super Committee's lack of understanding of the complexity of the eligibility formulas. The fear was that the committee might make additional cuts to Pell Grants or the student loan programs that would hurt the wrong students - such as cutting the remaining in-school interest subsidy for low-income borrowers.  NAICU will continue its conversations with the education committees on various options for making Pell sustainable in the years ahead.

Student Aid Alliance

During the most heated days of Super Committee negotiations, those close to the negotiations warned student aid advocates that, without strong constituent support, Pell Grants and student loans could be slashed with a blunt axe.  In response, the Student Aid Alliance, launched a campaign asking college presidents and their campus communities to individually sign on to a statement of support for federal funding of student aid.  The Alliance is a coalition of over 70 organizations which is co-chaired and co-staffed by NAICU and the American Council on Education,

The higher education community responded forcefully.  In just three weeks, the statement had received over 100,000 signatures, and was delivered to each member of the Super Committee.  (That number has since grown to more than 125,000.)  Signers include more than 700 college and university presidents, and over 50,000 students at more than 5,000 institutions - public, private, two-year and four-year. 

Despite the failure of the Super Committee, the "Save Student Aid" campaign will continue in order to underline to Congress the importance of the federal student aid programs for today's students.  Such a strong statement of support ensures that, as we continue bipartisan discussions of responsible changes to the student aid programs, we negotiate from a position of strength, and avoid a full raid on student aid funding.

The NAICU Board and committees discussed congressional action and possible changes to the Pell Grant program at their April and November meetings.  These candid and extended conversations shaped a clear policy direction for the NAICU staff:  to emphasize maintaining the maximum grant of $5,550, while at the same time protecting the neediest students and those most likely to complete.  This overarching direction will serve us and our members well as we move through the phases of the budget and appropriations process that lie ahead.

What Happens Between Thanksgiving and Christmas?

While the Super Committee is now headed for the Hill historical trivia books, the traditional education funding committees are still at work.  The federal government is now running under a continuing resolution through December 16.  There appears to be no appetite for the political drama of a government shutdown at the moment, so the only question is how and when the education spending bills will be approved before the holidays.

The Labor-HHS-Education subcommittee, which funds student aid, will be in the headlines when tough negotiations get underway.  While our primary concern is student aid funding, the media and political focus will more likely be on funding for the President's health care system priorities.

We will be working with our members and with congressional staff to find the best way to fund the $5,550 maximum Pell grant without breaking the bank or completely gutting the program.  At a minimum, appropriators need to make student aid changes in order to save $1.3 billion for the Pell Program in the upcoming bill.

Also in December, there will be plenty of debate on the tax agenda as well.  Headlines will probably center on the payroll tax, extension of the alternative minimum tax, and Medicare physicians' payments all set to expire on December 31.  Also in the mix, though, are a two of NAICU's top higher education tax provisions;  the IRA Charitable rollover, and the tuition deduction.

The IRA Charitable rollover is a key component of college fundraising.  The tuition deduction is an important provision for our middle class families.  Extending these, and the expiring higher education tax provisions in 2012, while being open to proposals to simplify the benefits, will be a core part of NAICU's legislative agenda for the coming year.

As NAICU continues to navigate the twists and turns of federal budget cutting in 2012, the association will rely upon members' guidance on how to balance responsible federal spending with the growing needs of an increasingly poor, increasingly diverse college population.  

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