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

President to President, July 30-August 3, 2012

Vol. 13, No. 26

  • Congress Wraps Up for the Summer, Passes CR and Moves Forward on Tax Extensions
  • ED Drops Distance Education Portion of State Authorization Requirement
  • House Approves Bill to Require Institutions Enrolling Foreign Students to Be Accredited
  • Senate HELP Committee Releases Report on For-Profit Institutions

Congress leaves town today for its traditional August recess, a five-week break that leaves much on the table for September, October and the post-election lame-duck session in November.

The current fiscal year ends on Sept. 30, and it is unlikely final FY 2013 spending bills will be enacted before that date. However, House Speaker John Boehner (R-OH) and Senate Majority Leader Harry Reid (D-NV) announced Tuesday they have agreed on a continuing resolution (CR) to fund the government through March 2013 at the overall discretionary spending level approved in last year's Budget Control Act.

Since the CR is still being drafted and the Congressional Budget Office needs time to review it, Congress will wait until September to vote on the bill. While the agreement, which has been approved by President Obama, forestalls a pre-election battle over spending for FY 2013, it does not eliminate a fight over either expiration of Bush-era tax cuts or automatic spending cuts slated to go into effect Jan. 1.

Some of the tax cuts scheduled to expire on Dec. 31 are of great interest to colleges and universities, students and families. There are currently three proposals in play—one passed by the House, one passed by the full Senate, and one approved yesterday by the Senate Finance Committee. All three measures include some of the following key higher education provisions.

Set to expire on Dec. 31, 2012:

  • The American Opportunity Tax Credit (AOTC),
  • The expanded Student Loan Interest Deduction (SLID),
  • Expanded Coverdell Education Savings Accounts (ESAs), and
  • Employer-Provided Educational Assistance (Sec. 127) benefits.

Expired on Dec. 31, 2011:

  • The above-the-line deduction for qualified tuition and related expenses,
  • The Individual Retirement Account (IRA) Charitable Rollover, and
  • The research and development tax credit.

The Senate Finance Committee version includes the tax provisions that expired last year, but not the provisions set to expire at the end of this year. We sent a letter Wednesday to the Senate Finance and House Ways and Means committees, urging extensions for all of the outstanding higher education provisions.

However, none of these measures stand any chance of seeing final action until after the November election. We will continue to pay extremely close attention to this issue and update you regularly.

The Education Department (ED) announced in a Dear Colleague letter last Friday that it will no longer enforce the distance education portion of its state authorization regulation, a move we have been advocating since ED first issued its new program integrity rules in October 2010.

The distance education provision mandated that institutions must meet any state requirements necessary to offer distance education in all states in which their students are located, an extremely complicated and costly process. ED's letter announced this change in their enforcement stance, while noting that institutions will still need to obtain permission to operate in their home states and comply with their home states' applicable requirements.

The decision not to enforce the policy comes in the wake of a June setback for ED's regulation, when an appeals court upheld a lower court's decision to overturn the rule. The appeals court ruling said the department had the authority to create such a rule but overstepped the bounds of the negotiated rulemaking process.

In a related development, ED has asked a federal court to modify part of that court decision and reinstate the requirement that institutions report information about their students' loan-repayment rates and debt-to-income ratios. For more on that request, see The Chronicle of Higher Education.

The House approved legislation (H.R. 3120) Wednesday that would require colleges and universities that enroll foreign students to be accredited.

The measure would require all higher education institutions that enroll 25 or more students on nonimmigrant visas to have national or regional accreditation that is recognized by the Education Department. If approved by the Senate, the measure would eliminate gaps in current visa law that have allowed fraudulent institutions to cheat foreign students who legitimately seek to study in the United States.

The Senate Committee on Health, Education, Labor and Pensions (HELP) this week released its final report on for-profit colleges, which found that many of these institutions put revenues above education, and charge students high tuition and loan rates that could leave them in debt for years.

The report says students at these institutions drop out in high numbers without the degree or certificate initially sought. Fifty-four percent of students enrolled in 2008-09 left without a degree or certificate by mid-2010. It also faulted the aggressive recruiting tactics and enrollment quotas often employed by for-profits and found that veterans were among those vulnerable to these tactics: Eight of the top 10 recipients of Post-9/11 GI Bill benefits were for-profit education companies.

To see HELP Committee Chair Tom Harkin's (D-IA) news conference on the report's release, see

President to President will return on Sept. 7.

Molly Corbett Broad
President of ACE