Senate Blocks Vote on Student Loan Interest Rate Freeze
Memo Available on Executive Order on Tuition Assistance, Veterans Benefits
ACE Submits Testimony on Tax Extenders, Asks House to Increase Student Loan Interest Deduction
House Votes to Cut NSF Political Science Funding
ACE, NACUBO Negotiate New Rates for College and University Radio Stations
Northeastern Hosts Event on Obama's 2020 Attainment Goal
IN BRIEF: Yellow Ribbon Program Agreement Deadline Is May 15
Congress returned to work this week after a brief break, and the Senate immediately took up a Democratic measure to freeze subsidized Stafford student loan interest rates at 3.4 percent for the coming year.
As you know, without congressional action, the interest rate for subsidized student loans will double on July 1 to 6.8 percent, which would cost about 7 million borrowers an estimated $1,000 each. With the support of President Obama and the approach of the presidential election, the interest rate freeze has become a high-profile issue and part of the continuing argument over which party can best spur economic growth and help middle class families.
After a brief debate Tuesday, Senate Republicans rejected a motion to bring the bill to a floor vote. While both parties desire a freeze, they do not agree on how to pay for it. The bill stalled in the Democratic-controlled Senate would offset the estimated $6 billion cost by eliminating a provision that allows some small businesses, classified as "S" corporations, to avoid some payroll taxes. Senate Republicans favor cuts to a preventative health care fund in the Affordable Care Act, which is how the Republican-controlled House offsets the cost of the bill (H.R. 4628) it approved April 27. However, the White House has threatened to veto the House GOP measure.
As I mentioned upon passage of the House bill, we strongly support maintaining the 3.4 percent interest rate. And, as we told both the House and Senate in recent letters, we are open to how they pay for it as long as other education program funding is protected. But with all signs pointing to a stalemate, we expect it to go down to the wire as the July 1 deadline approaches.
As you'll remember, President Obama issued an executive order on April 26 that directs the departments of Defense (DoD), Veterans Affairs and Education to establish "Principles of Excellence to strengthen oversight, enforcement, and accountability" of the Post-9/11 GI Bill and DoD's military tuition assistance program.
The executive order is designed to ensure service members, veterans and dependents considering higher education have the information they need to make good decisions and are protected from deceptive recruiting practices by institutions only interested in students for the federal funds they bring in. It is complex and contains a wide range of provisions, and its potential impact on institutions and students remains unclear as implementation will depend on regulations and agency directives that are under development.
In the meantime, we are happy to share a memo prepared by the law firm Hogan Lovells US LLP that summarizes the order. I will update you in the coming months as more information becomes available.
ACE this week submitted testimony for the record to the House Ways and Means Subcommittee on Select Revenue Measures for the April 26 hearing on expiring tax provisions.
In our testimony, we urged the extension of several expired or expiring tax provisions that are vital to college students and families. These include the American Opportunity Tax Credit, the deduction for qualified tuition and related expenses, the Employer-Provided Educational Assistance benefits, the expanded student loan interest deduction, and the expanded Coverdell Education Savings Accounts.
We also expressed our support for extending the Individual Retirement Account Charitable Rollover.
In related news, we sent a letter of support yesterday to Rep. Charles Rangel (D-NY) to endorse legislation he introduced to expand the student loan interest tax deduction. The bill would significantly expand the deduction by, among other things, increasing the deduction from $2,500 to $5,000 for individuals ($10,000 for joint filers), making permanent the elimination of the five-year limitation on the use of the deduction, and eliminating the income phase-out of $75,000 for individuals ($150,000 for joint filers) in the current deduction.
The House yesterday voted 247-163 to approve the FY 2013 spending bill (H.R. 5326) for the departments of Commerce, Justice and other agencies, which included an amendment to prohibit funding for political science projects by the National Science Foundation (NSF).
The amendment, offered by Rep. Jeff Flake (R-AZ), passed by a vote of 218-208, despite strong opposition from the research community. Rep. Flake also offered a broader amendment to cut $1.2 billion, or about 15 percent, from the NSF budget. That amendment failed.
This is not the last word on the political science provision—the Senate is expected to take up its version of the bill next week and then a conference committee must meet to resolve differences between the two.
After lengthy negotiations with performance rights organizations, ACE and the National Association of College and University Business Officers have reached a five-year agreement on rates paid by college and university radio stations not affiliated with National Public Radio.
The rates, negotiated every five years, were published by the Copyright Royalty Board in the Federal Register on April 25 as proposed rules for comment. This is a required step in the negotiation process, and we do not anticipate any changes to the rates as proposed.
Payments for each license year are due to American Society of Composers, Authors and Publishers; Broadcast Music, Inc.; and SESAC by Jan. 31 of each year.
At the request of the Department of Education (ED), ACE and Northeastern University (MA) hosted ED Under Secretary Martha Kanter for two events this week in Boston: a conversation with college and university presidents and an open public meeting for students, administrators and faculty.
The focus of these conversations was the Obama administration's 2020 college attainment goal, as well as ED's budget proposals for the coming fiscal year. In her meeting with presidents, Under Secretary Kanter spoke of how pleased the department has been to hear about how campuses are working to increase productivity and reduce costs. In turn, presidents encouraged the department to avoid being overly prescriptive in the information it requires institutions to provide to students and families.
Loyola Marymount University (CA) will host a similar event on June 15, and I look forward to updating you on that conversation.
Colleges and universities have until May 15 to submit the new open-ended Yellow Ribbon Program agreements for the 2012-13 academic year to the Department of Veterans Affairs (VA). Once VA accepts an institution's agreement, it will be considered an agreement in effect for the upcoming academic year and all future years unless VA or the institution notifies the other party that changes are requested. The Yellow Ribbon Program is part of the Post-9/11 GI Bill and allows higher education institutions to enter into voluntary agreements with VA to fund tuition expenses that exceed either the annual maximum cap for private institutions or the resident tuition and fees for public institutions.
Molly Corbett Broad
President of ACE