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President to President

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President to President
Molly Corbett Broad's weekly email newsletter to higher education leaders.

President to President, July 16-20, 2012

Vol. 13, No. 24

  • House Subcommittee Approves FY 2013 Education Funding
  • House and Senate Hold College Cost Hearings
  • ACE Requests California Supreme Court Hear UC Student Fee Refund Case
  • ED and CFPB Release Report on Private Student Lending
  • IN BRIEF: ED Releases "Dear Colleague" Letter on Military Education Principles of Excellence; VA Responds to Offset Policy Request; HED Releases Annual Report

The House Appropriations Committee this week moved forward on a FY 2013 budget for the Education Department (ED), with the Labor, Health and Human Services, Education Subcommittee approving a $70 billion spending plan that is surprisingly similar to the Senate plan passed in June.

The legislation, which allocates funding for programs within the departments of Labor, Health and Human Services, Education and other related agencies, contains a total of $150 billion in discretionary funding, $6.3 billion below last year's level and $8.8 billion lower than President Obama's FY 2013 budget request. It is also $6.8 billion below the level agreed to in the Budget Control Act last year. However, most programs for higher education received level funding from FY 2012.

Under the House bill, as in Senate measure, the maximum Pell Grant would increase by $85 to $5,635, and most other student financial aid programs—such as Supplemental Educational Opportunity Grants, Federal Work-Study Grants, TRIO Programs, and GEAR UP, as well as funding for Historically Black Colleges and Universities—would remain at FY 2012 levels. On the research front, both bills would maintain the National Institutes of Health budget at the FY 2012 level of $30.6 billion, although the Senate would provide a $100 million increase for research.

The Senate bill includes several changes to Pell Grant eligibility, including a partial restoration of Pell Grants for students without a high school diploma or GED® credential enrolled in specific types of programs, and a provision to stop students enrolled in online classes from using Pell Grants to cover living expenses. These provisions are not included in the House measure.

A key higher education provision in the House bill, which is not in the Senate measure, would block funding for the Education Department's program integrity rules for for-profit colleges, including the gainful employment regulation.

The final committee report and associated funding charts have yet to be released, so the status of programs such as Title VI International Education Programs, Fund for the Improvement of Postsecondary Education (FIPSE) and Teacher Quality Partnership Grants is not yet known. One potential loss we do know: The Perkins Career and Technical Education Program would be cut by $98.9 million.

The full House Appropriations Committee is expected to vote on the bill next week. However, we don't expect any further work on appropriations from either chamber until after the election.

The Senate and House both continued their discussion of college costs in hearings this week, looking at innovative practices by higher education institutions and states to curb costs for students and families.

The Senate Health, Education, Labor and Pensions Committee focused on institutional practices in the Thursday hearing, "Making College Affordability a Priority: Promising Practices and Strategies." Panelists discussed a range of programs—from improving the quality of distance education to awarding Pell Grants in the eighth grade—which Chairman Tom Harkin (D-IA) said he hoped could help inform any federal policies that might be implemented in this area. Testifying at the hearing were Don Heller, dean of the College of Education at Michigan State University; Steven Leath, president of Iowa State University; Jim Murdaugh, president of Tallahassee Community College (FL); Thomas J. Snyder, president of Ivy Tech Community College (IN); and Carol Twigg, president and CEO of the National Center for Academic Transformation. See the above link to view full testimony and a webcast of the hearing.

Meanwhile on Wednesday, the House Subcommittee on Higher Education and Workforce Training looked at what states were doing to help make college more affordable. See the press summary for details and links to testimony.

We filed a letter Tuesday with the California Supreme Court in support of the Regents of the University of California (UC), asking for a review of a lower court's decision that UC must refund fees for professional school students who enrolled starting in 2003. Unfortunately, we received notice from the court on Wednesday that it had declined to hear the case.

The Superior Court of San Francisco ruled in Luquetta v. Regents of the University of California that UC breached an implied contract in raising the fees, arguing it had made a binding promise to those students that they would pay the same level of fees over the course of their studies. Under the decision, UC will have to pay a total of $38 million to thousands of former students.

We supported the appeal in an effort to encourage the court to give a more explicit understanding of whether traditional contract notions can or should apply to university-student interactions. Along with the university, we believe that relationship is different from a commercial relationship. The fiscal crisis in many states—seen most sharply in California—exacerbates the need for clarification in this area.

The Education Department and the federal Consumer Financial Protection Bureau (CFPB) released a report this morning that gives an overview of the private student loan market and makes recommendations for reform.

The report, mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, found that private loans, which make up $150 billion of the more than $1 trillion in outstanding student loan debt, are much riskier than federal student loans for both the student and the co-signer. Recommendations discussed to curtail these risks include requiring school certification of private loans to prevent unnecessary borrowing and risk, revisiting the harsh treatment of private loans in bankruptcy, and giving students a way to see the full picture of their student loan debt.

The CFPB also launched a new online tool designed specifically for student loan borrowers who are in distress. The Student Loan Debt Collection Assistant aims to help such borrowers better understand their options, communicate with servicers and debt collectors, and find ways out of default.

The release of the report may rekindle interest on Capitol Hill in enacting student loan bankruptcy discharge legislation, which ACE is on record as supporting.


The Education Department (ED) issued a "Dear Colleague" letter July 13 to provide guidance to institutions on how to comply with President Obama's recent Executive Order. The order directs the departments of Defense, Veterans Affairs and Education to develop Principles of Excellence to apply to colleges and universities receiving funding from federal military and veterans' educational benefits programs. Although the guidance is supposed to clarify institutional obligations, unfortunately in some cases it makes things more confusing. However, ED said it envisions the guidance as a living document that will continue to be updated and changed.

The Department of Veterans Affairs (VA) responded recently to a higher education community request to not implement a policy under consideration that would allow VA to recoup debts owed by veterans from the tuition and fees payments that are made to institutions under the Post-9/11 GI Bill. Currently, the VA recoups debts from housing and other payments that go directly to veterans but not from tuition and fee payments that go directly to institutions. In the letter, VA does not confirm or deny that it intends to reinstate the offset policy, but does say it is "currently conducting an in-depth analysis of the law." The letter also points out that VA has asked Congress to pay students directly, rather than institutions.

Lastly this week, I am pleased to share the Higher Education for Development (HED) Annual Report for FY 2011. Fifteen of the 16 institutions with new HED partnerships last year were ACE members, and I'm confident you will be impressed with the tremendous accomplishments of these institutions in addressing complex global challenges. HED is pursuing an even more robust agenda in FY 2012, with an unprecedented number of new funding opportunities, including four Requests for Applications (RFAs) as part of a new Women's Leadership Program in Armenia, Rwanda and Paraguay, with South Sudan soon to follow. For current RFAs, see the HED website.

Molly Corbett Broad
President of ACE