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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 25-29, 2011

Vol.12, No. 30

  • Debt Talks Down to the Wire; Student Aid Appears Safe for Now
  • Restoring GI Bill Fairness Act Sent to President
  • REMINDER: Please Complete American College President Survey

The country is now four days away from the Aug. 2 deadline to raise the debt ceiling, and in a situation that is changing by the hour, lawmakers appear as far apart as ever. Conservative Republicans are demanding an end to what they say is out-of-control government spending, while Democrats are seeking to protect funding for social programs.

There are two competing plans on the table at this point, one from House Speaker John Boehner (R-OH) and one from Senate Majority Leader Harry Reid (D-NV). The House was expected to vote on the Boehner proposal last night, but that was postponed when it became clear he lacked the votes to pass it. A vote on a revised bill—which now includes a balanced budget amendment—will occur later today.

Even if the revised Republican bill passes the House (which we expect), it will be promptly rejected by the Senate. When this happens, the Senate will move to the plan being developed by Majority Leader Reid. Even if Reid's plan is approved by the Senate, however, it is very unlikely to win support in the House. In short, it's unclear what will happen next and what solutions will ultimately emerge.

For most of this week, it appeared the cuts we anticipated to the Pell Grant Program might be avoided. As a reminder, Pell is expected to cost $37 billion in the 2012-13 academic year. The president and congressional leaders previously indicated significant cuts would be unavoidable. But for unexplained reasons, the Reid and Boehner proposals both would protect Pell from the cuts we were told to expect.

However, as The Hill reported last night, conservative anger over the House bill focused in part on the inclusion of $17 billion in supplemental spending for Pell Grants. This funding, which is still in the revised Boehner bill, should make it significantly easier for Congress to maintain the maximum Pell Grant at $5,550 in FY 2012 and the projected $5,620 in FY 2013. The Student Aid Alliance released a statement this afternoon urging members to maintain the Pell funding in both the House and Senate measures.

Unfortunately, both the Reid and Boehner proposals would eliminate the in-school interest exemption for graduate and professional students, increasing the cost of their federal loans. While we of course applaud avoiding cuts to the Pell Grant Program, we strongly oppose this change.

The Treasury Department reportedly might unveil an emergency plan today explaining how the government would function and pay its obligations if Congress does not come through with a resolution to the crisis. If the unthinkable happens and the country defaults, I will be in touch early next week to share any relevant information.

The House of Representatives voted unanimously July 26 to approve the Restoring GI Bill Fairness Act of 2011 (H.R. 1383), which would temporarily allow a select group of students enrolled in private institutions to continue receiving the same tuition and fee benefit level they received under the original Post-9/11 GI Bill. The Senate passed the bill unanimously last week, after the House passed a previous version in May.

The bill would grandfather Post-9/11 GI Bill payments for student veterans currently enrolled in private colleges and universities, protecting them from a possible reduction in benefits due to changes included in the Veterans Educational Assistance Improvements Act of 2010 passed in January. That law replaced state-by-state caps on tuition and fee payments with a single nationwide cap of $17,500 per year for private institutions. The cap, which was to go into effect Aug. 1, would have resulted in a reduction in benefits for students currently attending certain private institutions primarily in seven states: Arizona, Michigan, New Hampshire, New York, Pennsylvania, South Carolina and Texas.

The president is expected to sign the bill before the cap takes effect.

Unfortunately, the bill does not grandfather GI Bill payments for students attending certain public institutions and paying out-of-state tuition rates, which in some cases were covered under the prior benefit calculation. While this issue was not included in the legislation, as Inside Higher Ed said this week, H.R. 1383 is probably not the last change for the Post-9/11 GI Bill.

You should have received a hard copy of the American College President survey in the mail this week. We would be extremely grateful if you would complete and return the survey, or fill it out online. We understand that some of you may not have received a return envelope with the survey, and we apologize for that error. If you have completed the printed copy, please mail it to ACE, One Dupont Circle, NW, Suite 800, Attn: Bryan Cook, Washington, DC 20036. The information gathered through this survey provides us with data for The American College President. For more information, please email or call (202) 939-9381.

Molly Corbett Broad
President of ACE