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

President to President: House Passes Student Loan, Database Bills; President Threatens Veto of Student Loan Bill

May 20-24, 2013 ~ Vol. 14, No. 16

  • House Passes Student Loan, Database Bills; President Threatens Veto of Student Loan Measure
  • Senate Judiciary Committee Approves Comprehensive Immigration Bill
  • ED's State Authorization Deadline Delayed One Year; Next Round of ED Negotiated Rulemaking Begins
  • IN BRIEF: ED Releases Interim Final Rule on Subsidized Loan Limits

Both the Senate and House moved forward this week on several pieces of legislation important to the higher education community.

In the House, lawmakers yesterday voted 221-198 along largely partisan lines to approve the Smarter Solutions for Students Act (H.R. 1911), legislation intended to address the upcoming interest rate increase for subsidized student loans. The rate is slated to double from 3.4 percent to 6.8 percent July 1.

The bill would tie both subsidized and unsubsidized Stafford student loan rates to the 10-year Treasury note, plus 2.5 percent, and end the rate differentiation between the two types of loans. It would also tie PLUS loans for parents and graduate students to the 10-year Treasury note, plus 4.5 percent. These rates would reset every year, like adjustable rate mortgages.

The Obama administration released a Statement of Administration Policy Wednesday in advance of the vote, saying that if "the president were presented with this legislation in its current form, his senior advisors would recommend that he veto the bill." Secretary of Education Arne Duncan also released a statement expressing concern about the House approach, although earlier in the week he had positive things to say about the measure when he appeared before the House Education and the Workforce Committee. The House Education and the Workforce Committee pushed back immediately on Duncan's statement, reinforcing its support for the bill and intent to find a solution "that both the House and the president can support" (click here and here to read the committee statements).

Despite this war of words, the process has a long way to run. The Senate has yet to act on its own bill, the Student Loan Affordability Act of 2013 (S. 953). We sent a letter of support and our statement of key principles on student loan legislation last week to the bill's sponsors. Congress is on a break next week for the Memorial Day holiday, but we expect the Senate to move forward soon after returning in order to meet the July 1 deadline.

On a different front, the House this week also passed, by voice vote, the Improving Postsecondary Education Data for Students Act (H.R. 1949), introduced by Rep. Luke Messer (R-IN). You can read our letter on this bill here. This legislation would appoint a commission to study the feasibility and desirability of a national student information database. A separate measure introduced in the Senate earlier this month by Sens. Ron Wyden (D-OR), Marco Rubio (R-FL) and Mark Warner (D-VA), the Student Right to Know Before You Go Act, would mandate the creation of such a database. Both bills are part of the initial work on reauthorizing the Higher Education Act.

Meanwhile, the Senate Judiciary Committee voted 13-5 Tuesday to approve the comprehensive immigration bill it has been marking up since May 8, considering dozens of amendments to craft the final measure. The landmark legislation's higher education-related provisions include an expanded version of the DREAM Act, revised rules on student visas and an increase in the number of H1-B visas for highly skilled workers.

The centerpiece of the legislation is a 13-year path to citizenship for many of the 11 million people now in the country without legal status, a path that would be expedited for DREAM Act students, young people brought illegally to the United States as children. The version of the DREAM Act included in the bill removes the age cap for eligibility and repeals the current federal law that limits states' options to provide in-state tuition to undocumented students. The committee approved an amendment proposed by Sen. Mazie Hirono (D-HI), which would allow DREAM Act students to qualify for federal loans and federal work-study, a change we had requested in our May 8 letter to committee leaders.

As I mentioned last week, the committee also altered the rules on student visas, approving two amendments proposed by Sen. Charles Grassley (R-IA). One provision would require all institutions that accept foreign students to be accredited by an approved regional or national accrediting agency, an effort to shut down diploma mills. Another amendment would require customs officials to have access to the federal student-visa database—known as the Student and Exchange Visitor Information System (SEVIS)—within 120 days of the legislation's enactment.

A last-minute agreement on high-skilled visas with Sen. Orrin Hatch (R-UT) negotiated by Sen. Charles Schumer (D-NY) would triple the number of H1-B visas available, to 180,000, more quickly than originally proposed.

The bill now moves to the Senate floor, where it faces weeks of debate. Senate Majority Leader Harry Reid (D-NV) has said he will make the bill the chamber's priority in June.

The Education Department (ED) announced on May 17 that it would push back by a year the deadline for complying with the state authorization rule, which requires states to authorize higher education institutions within their borders.

The rule, first released in 2010 as part of ED's package of "program integrity" regulations, is most prominently known for the provision that would have required distance education programs to get permission to operate from every state in which they enroll students. As you might remember, that provision was struck down in July 2011 by the U.S. District Court for the District of Columbia and is not being enforced. However, the rule also had two other sections, which detail the processes each state must follow to authorize its colleges to operate. ED recently granted a stay on enforcing the rules but has indicated it will begin enforcing those provisions on July 1, 2014. The one-year delay only applies to these later sections.

Kicking off the next round of negotiated rulemaking, a series of ED public hearings began this week, with one in Washington, DC on Tuesday and the other yesterday at the University of Minnesota-Twin Cities. A third is scheduled for May 30 in California and a fourth has been added on June 4 in Atlanta. The hearings are intended to finalize the rulemaking agenda for the negotiations scheduled to begin in the fall, with final rules taking effect in 2015. As The Chronicle of Higher Education pointed out, gainful employment dominated the debate at the DC hearing, although several speakers also urged ED to ease the burdens created by the state authorization rule. (Also see Inside Higher Ed for more details on that session).

IN BRIEF

The Education Department published interim final rules in the May 16 Federal Register that implement the 150 percent Direct Subsidized Loan limit included as part of the law that extended the 3.4 percent interest rate for subsidized Stafford Loans until July 1. The law placed a limit on Direct Subsidized Loans eligibility for new borrowers on or after July 1, 2013, to no more than 150 percent of the published length of the educational program in which they are currently enrolled. This is a matter of great concern to your financial aid office and I know that their professional association, the National Association of Student Financial Aid Administrators, has been in touch with campus officials.

Molly Corbett Broad
President of ACE​