- President Obama Pledges “Aggressive Strategy” on Higher Education
- Senate Approves Student Loan Interest Rate Bill
- House Committee Approves Higher Education Regulatory Relief Bill
President Obama turned his focus to higher education policy this week, delivering speeches at Knox College (IL) and the University of Central Missouri Wednesday, the same day the Senate finally passed its student loan interest rate bill.
The president said he soon will unveil a plan that tackles the issue of college costs and promised to include other proposals intended to overhaul parts of the higher education system. As you know, President Obama has spoken of higher education reform in the past, including in the 2012 State of the Union address and a subsequent speech at the University of Michigan.
The president blended higher education themes into a day that focused mainly on the state of the economy. At the University of Central Missouri, he commended an initiative that aims to speed the time to earn a degree, allowing some students to gain associate degree credits in certain high-tech career areas while still in high school and then earn a bachelor’s degree at Central Missouri in another two years.
While there were few details about what will be in his proposal, the president pledged to pursue “an aggressive strategy to shake up the system.” We will be in touch with administration officials to discover what the president has in mind, and I will update you when more information becomes available.
After several months of debate and ill-fated attempts at compromise, on Wednesday the Senate on passed legislation to fix student loan interest rates. The White House issued a Statement of Administration Policy supporting the bill, signaling that this matter has almost come to a close. The bill must now return to the House, but passage there is expected next week.
Under the measure, which was approved 81-18, interest rates on subsidized and unsubsidized undergraduate Stafford loans would be tied to the 10-year Treasury note rate, with an add-on of 2.05 percent. Rates on these loans would be set at the time the loan is taken out, fixed for the duration of the loan and capped at 8.25 percent. Stafford loans for graduate students would have a 3.6 percent add-on and a cap of 9.5 percent, and parental PLUS loans would have a 4.6 percent add-on and a 10.5 percent cap.
I sent a letter to the Senate on behalf of ACE and nine other higher education associations in advance of the vote, encouraging senators to support the measure. Most importantly, with the fall semester only weeks away, we needed a solution that would immediately lower rates for current students. (As you’ll remember, the interest rate doubled to 6.8 percent July 1.) However, we also noted that because the bill uses a market-based rate, future interest rate increases could significantly raise the costs of borrowing. If this happens, we would urge Congress to revisit the issue. We also informed Congress that we will be looking for an early opportunity to restore the equal treatment of graduate student loans.
The House Education and the Workforce Committee on Wednesday approved the Supporting Academic Freedom Through Regulatory Relief Act (H.R. 2637), which would repeal three Education Department (ED) regulations: gainful employment, state authorization and the federal definition of credit hour.
As I mentioned last week, we sent a letter July 17 to Reps. Virginia Foxx (R-NC), John Kline (R-MN) and Alcee Hastings (D-FL), thanking them for introducing the bill. We have vigorously opposed the creation of a federal definition of credit hour, and this legislation is consistent with our long-standing position. The credit hour and other regulations addressed by this bill have been a problem since ED finalized them in 2011—they are complex, confusing and burdensome, and have raised challenging compliance issues for our institutions.
While this bill could be approved by the House after the August recess, there is little hope that the Senate will take it up. For its part, ED announced a new round of rulemaking in April, followed by a separate notice in June that it would hold a stand-alone round of rulemaking on gainful employment. Add to that the upcoming reauthorization of the Higher Education Act—which expires at the end of this year—and it is clear that these regulations will continue to be under the microscope for the foreseeable future.
Molly Corbett Broad
President of ACE