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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 23-27, 2012

Vol. 13, No. 25

  • ​​Duncan, Senate Democrats Warn About Danger of Education Cuts Under Sequestration
  • Senate Looks at Private Student Loan Industry
  • ED Releases College "Shopping Sheet"
  • Institutions Signing VA Principles of Excellence Must Use Shopping Sheet
  • Senate Hearing on Higher Education-Related Tax Deductions
  • ACE Joins NYU in Arguing Against Graduate Student Unionization
  • Senate Hearing on Visa Reform
  • ACE, Partners Release From Soldier to Student II

Higher education was on top of the Senate's agenda this week, with hearings on the impact of education budget cuts under "sequestration," private student loans, higher education tax credits and visa reform.

Education Secretary Arne Duncan was among those testifying before the Senate Appropriations Subcommittee on Labor, Health and Human Services, Education and Related Agencies Wednesday to discuss the potential impact on both K-12 and higher education if Congress cannot agree on a plan to avoid the automatic across-the-board budget cuts set for January. Subcommittee Chair Tom Harkin (D-IA) issued his own report at the hearing, and together, the two painted an alarming picture of what we might face in five short months.

As you'll remember, last summer Washington was dominated by the fight to raise the federal debt ceiling. In order to secure an agreement to extend the debt limit through 2013, Republicans and Democrats eventually agreed to $1.4 trillion in "triggered" budget cuts, or sequesters, under the Budget Control Act (BCA). Half of the money would be taken from domestic discretionary spending and the remaining half from the defense budget, both over 10 years. The so-called "Super Committee" was tasked with cutting the budget in more targeted ways—if they had been successful, the sequester would have been pre-empted. But the Super Committee failed, and Congress is now wringing their hands about what to do.

Sec. Duncan told the panel that the effects on higher education would include the loss of about 2,200 research grants and delays in the processing of federal student aid. The Harkin report said that under sequestration, 110,000 fewer low-income students would receive Supplemental Educational Opportunity Grants, and nearly 52,000 fewer students would get Federal Work-Study money. One bright spot: Under the terms of the BCA, discretionary and mandatory Pell Grant funding would be exempt from sequestration in the coming year.

As Congress is expected to leave for five weeks beginning Aug. 6, we don't expect any real movement to forestall these cuts until the fall, perhaps after the election. However, the conversation will continue in the coming weeks, and I will keep you updated on any developments.

In another hearing this week, the Senate Banking Subcommittee on Financial Institutions and Consumer Protection was told that private student loan borrowers need more and better options for repaying their debt.

On tap for discussion was the Education Department (ED)-Consumer Financial Protection Bureau (CFPB) report released last week that made recommendations for reforming the private student loan market, including 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. According to ED and CFPB, 850,000 private student loans are in default, and because of the co-signing requirement, this affects 1 million borrowers.

The hearing has sparked a renewed interest in a legislative change that would restore bankruptcy protection to student loans, a position for which we have long advocated.

For an interesting take on this issue, see Time's recent piece, "Subprime Private Student Loans: No Way Out."

The Obama administration this week unveiled the final version of its "shopping sheet," a model financial aid letter intended to help students understand their costs before deciding where to enroll.

The shopping sheet, a cooperative project between the Education Department (ED) and the Consumer Financial Protection Bureau, is a template the administration hopes institutions will use to display total estimated annual costs, institutional rates of completion and default, and information about a student's potential monthly loan payments after graduation. Secretary Arne Duncan published an open letter to college and university presidents, asking you to adopt the shopping sheet as part of your institution's financial aid awards starting in the 2013-14 academic year. However, adoption is voluntary and the extent to which institutions are able or willing to use the template will vary considerably.

Additional information on the shopping sheet will be forthcoming in a letter from ED to financial aid officers.

In related news, institutions that agree to the administration's "Principles of Excellence for Educational Institutions Serving Service Members, Veterans, Spouses, and Other Family Members" will be required to use the Education Department's (ED) shopping sheet in 2013-14.

The shopping sheet, along with ED's July 13 "Dear Colleague" letter, clarifies to some extent institutional obligations under the Principles of Excellence, but questions remain. The requested date for expressing intent to comply is next Wednesday, Aug. 1.

If you would like to see which institutions have agreed to the Principles, a list can be found (organized by state) at www.gibill.va.gov.

The Senate Finance Committee held a hearing Wednesday on higher education tax incentives, looking at potential improvements to make these benefits less confusing and more useful as a tool to improve higher education access.

A Government Accountability Office study released to coincide with the hearing found that 14 percent of filers didn't claim a credit or deduction for which they were eligible, missing out on about $466 in tax savings or refunds. Another 250,000 filers didn't claim the benefit that would give them the most money, and missed out on about $300 per taxpayer.

The panel looked at specific suggestions for simplifying the process as well as areas such as the uses, value and payouts of university endowments; charitable giving to universities; and tax-exempt bonds. There was some discussion of the so-called "Bennett Hypothesis": whether federal support for higher education—tax benefits, student loans and grants—drives up tuition prices at colleges and universities. My thanks to President Waded Cruzado of Montana State University for her clear rebuttal of this disproven idea.

Also this week, the House Ways and Means Subcommittee on Oversight held a hearing on "Public Charity Organizational Issues, Unrelated Business Income Tax, and the Revised Form 990." For details on that panel, see the Ways and Means website.

ACE filed a brief Tuesday with the National Labor Relations Board (NLRB) as it decides whether to allow private college graduate students to unionize in two cases involving New York University.

The NLRB last month asked parties to file briefs on several questions in the cases, including whether the NLRB should modify or overrule an earlier decision which held that graduate student assistants at Brown University (RI) did not have rights to unionize under the National Labor Relations Act.

ACE argued in the brief that petitioners sought to contravene decades of well-reasoned and settled Board precedent and policy. Such a decision will have an adverse impact on how universities are able to address significant issues in graduate student education, including financial aid, degree requirements and similar matters, and will intrude upon academic freedom and the relationship between university professors and their students.

Joining the ACE brief were the Association of American Medical Colleges, the Association of American Universities, the College and University Professional Association for Human Resources and the National Association of Independent Colleges and Universities.

The Senate Judiciary Committee Subcommittee on Immigration, Refugees and Border Security held a hearing Tuesday on "Strengthening the Integrity of the Student Visa System by Preventing and Detecting Sham Educational Institutions."

The panel met in the wake of a recent Government Accountability Office report that found serious flaws within the Student Exchange and Visitor Program, the Department of Homeland Security (DHS) agency that operates the student visa system and ensures institutions and students are meeting federal rules. Both DHS and its Immigration and Customs Enforcement agency came under bipartisan criticism for lax oversight of unaccredited schools.

Sen. Charles Schumer (D-NY) outlined provisions of a bill to impose stiffer penalties on those who commit fraud by running bogus institutions, require unaccredited institutions in the visa system to undergo an annual inspection by federal investigators, and ensure institutions enrolling international students are certified by their home states.

For more on the hearing, see The Chronicle of Higher Education's report.

ACE on Wednesday released From Soldier to Student II: Assessing Campus Programs for Veterans and Service Members, an update of our 2009 study which provided the first national snapshot of the programs and services colleges and universities had in place for veterans and military personnel following passage of the Post-9/11 GI Bill in 2008.

The report, available as a free PDF, showed that many campuses have made commendable progress since 2009, but we still face many challenges in serving this growing and critical population of students.

We are very grateful for the partnership of the American Association of State Colleges and Universities, NASPA: Student Affairs Administrators in Higher Education and NAVPA—National Association of Veteran's Program Administrators on this important effort. My thanks also go to many of you for completing the survey that was the basis of this report. 

Molly Corbett Broad
President of ACE