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Advisory Committee on Student Financial Assistance
May 1. 1997
DECEIVED MAY 0
The Honorable William F. Goodling
Committee on Education and the Workforce
U.S. House of Representatives
2263 Rayburn House Office Building
Washington, D.C. 20515
Dear Congressman Goodling:
The Advisory Committee on Student Financial Assistance was established by Congress in the
Higher Education Amendments of 1986 to serve as an independent source of advice and counsel
to Congress and the Secretary of Education on student financial aid policy. The purpose of this
letter is to transmit the Committee's reauthorization recommendations for improvements in four
broad areas:
access for low- and middle-income students;
application and eligibility determination;
loan program features; and
management, systems and contracts.
The Committee's reauthorization recommendations are listed in the enclosure.
Improving Access
Since its creation, the Committee has identified improving access as its primary focus. As a
result of extensive deliberations, the Committee has found that progress toward the federal
government's primary role in higher education--promoting equal access for low- and middle-
income youth--has seriously stalled; and that a renewed commitment to at-risk students is
required to position our nation for the 21st century.
While the Title IV programs have done an excellent job in supporting entry to higher education
for traditional, college-bound students. wide disparities in participation by family income
continue to exist. Given that the gap in college going rates between low- and high-income
students remains at 32 percentage points, it is imperative to refocus federal energy and resources
on access during the upcoming reauthorization.
1280 Maryland Avenue, S.W., Suite 601, Washington, D.C. 20202-7582 Tet 202/708-7439 Far: 202/401-3467
Aa independent committee created by Congress to advise on student aid policy
The Honorable William F. Goodling
May 1. 1997
Page 2
As a start, Congress and the Department of Education (the Department) must make a
commitment to fund the Pell Grant program at a level that restores lost purchasing power.
Congress has taken a first step by increasing the maximum Pell Grant to $2,700. However, such
progress must be continued if access for needy students is to be maintained and dependence on
loan programs diminished.
Equally important is the need for the Department to develop a well-defined and broadly
articulated federal strategy which clearly defines access goals and measures agency performance
against those goals. This strategy must be based on a new way of thinking about access-in
particular, one that uses a framework or model relating specific program interventions to specific
participation targets, systematically estimating the funds necessary to narrow remaining gaps in
participation by income, and reporting annually to Congress on progress.
Finally, the Department needs to make a quantum improvement in the quality of information
provided to students, parents and counselors about academic preparedness, college costs and
financial aid. Available data suggest that needy families do not have sufficient information to
make wise choices about investments in higher education. Alarmed and confused by constant
reminders in the media that college costs appear to be prohibitively high and escalating rapidly,
these families, for whom the Title IV programs were created, usually learn far too late of their
eligibility for federal, state and institutional aid. They never learn how such aid can make
college attendance and graduation possible, along with dramatically greater economic
opportunity and significantly higher lifetime income.
In order to address this problem, the Department must communicate directly and effectively, in
middle school, the average amount of assistance that similar needy families with children in
college are currently receiving in the form of federal, state and institutional aid. Only when
armed with such data will poor families understand their true college costs and be able to
formulate realistic expectations about their future and make rational choices about programs of
study in high school.
Since the TRIO programs constitute the federal early outreach effort under the Title IV programs.
they are the appropriate place to start in reinventing the federal access strategy. However,
limited funding permits TRIO to serve only a small portion of eligible students--less than 10
percent of those eligible--late in their high school years. With additional resources, the programs
could effectively benefit many more students by improving academic preparation and decision-
making related to college. The TRIO programs must be strengthened and expanded if any
progress is to be made in equalizing higher education participation.
Two other policies are critical to making and sustaining progress toward equal access. First, the
current system of remediation which permits students to take remedial courses as an integral part
The Honorable William F. Goodling
May 1, 1997
Page 3
of the college curriculum must be maintained and strengthened. Proposals seeking to "raise
standards" by stripping away federal student aid for remedial courses make the task of improving
access exceedingly more difficult and must be avoided. Second, it is important for the federal
government to encourage states to maintain and increase state grant aid for the neediest students.
Improving Application and Eligibility Determination
In accordance with its mandate from Congress, the Advisory Committee has been exploring need
analysis and the financial aid delivery system since 1988. The Committee's interest focuses on
assuring that low- and middle-income students are not denied access to higher education because
of deficiencies in the mechanisms by which aid is awarded and disbursed. It is essential that
other opportunities to improve the mechanisms--forms, processes and models--used to deliver the
Title IV programs are explored to eliminate unintentional barriers to access through unnecessary
complexity and burden.
Great strides have been made by Congress and the Department in simplifying and integrating
application and eligibility processes to provide optimal service for institutions and students.
Implementation of the Free Application for Federal Student Aid (FAFSA) has resulted in nearly
8.5 million students-95 percent of recipients-receiving all types of aid through the submission
of the FAFSA alone. Currently, 48 states use the FAFSA exclusively. In addition,
reapplication--that is, permitting continuing students to update existing data rather than start with
a blank form--has benefited 3.4 million students.
However, in spite of the success of the FAFSA, the application process has remained largely
paper-bound. In 1996-97, only one in seven applicants used electronic processing for applying
or reapplying for federal student aid. Even FAFSA EXpress--the Department's PC-based
software which allows students to apply electronically--has had limited success; fewer than
60,000 applicants applied using this system. While some forms of electronic processing have
increased for 1997-98, less than nine percent of the applications have been submitted
electronically.
The Advisory Committee believes that it is important to build upon the success of the FAFSA in
two ways. Implementation of an interactive student aid application on the World Wide Web with
an electronic signature and adoption of a master application hold great potential for further
reducing burden and streamlining the application more effectively than ever before possible.
These two changes--using the latest technology--would greatly improve the application process
for students and institutions. The Department must also ensure the use of its electronic
applications, particularly by at-risk students and students served by TRIO.
Another opportunity for simplification is improving and maintaining the simplified needs test.
including the "automatic zero" family contribution for the poorest families. The 1992
The Honorable William F. Goodling
May 1, 1997
Page 4
Amendments extended eligibility under simplified need analysis to families with adjusted gross
incomes of less than $50,000, who file simple tax returns or are not required to file tax returns.
In award year 1996-97, four million students qualified for the simple needs test; however, some
students still completed the entire form. A more effective electronic application process can help
eliminate barriers to the simple needs test on the paper application.
While modifications to the need analysis formulas in the 1992 Amendments have had positive
effects and wide support in the financial aid community, there were unintended consequences in
the need analysis treatment of single independent students without dependents and on dependent
student earnings. The President's bill and recommendations from presidential associations will
restore Pell eligibility for single independent students by changing the need analysis formula,
however, the Committee believes that the treatment of dependent student earnings must also be
addressed to ensure that the Pell program does not discourage persistence of low-income students
who work while in school.
Improving the Loan Programs
The Advisory Committee has spent four years conducting two congressionally mandated studies
of the Federal Family Education Loan Program (FFELP) and the Ford Federal Direct Loan
Program (FDLP). Our recommendations for the loan programs are based on principles that
promote: streamlining and standardizing processes, decreasing institutional and student burden,
and integrating student loans into the Title IV delivery system. Most recently, the Committee
recommended to Congress that each institution should have the right to choose the loan program
that best serves its needs. Each program has benefited materially from the other, and competition
has led to much better service for students and institutions.
Several specific improvements will ensure that these two programs, existing side-by side, will
continue to provide students and institutions with enhanced services and performance. Both the
FFELP and FDLP would benefit from an electronic, multi-year line of credit promissory note,
and the elimination of loan disbursement limitations such as multiple disbursements of single
semester loans and a 30-day delay in disbursing loans for first-year, first-time borrowers.
In the FFELP. establishing a national delivery system integrated intoTitle IV delivery--using the
FAFSA as the loan application--will minimize student and institutional burden and improve
program accountability. Implementing a single source borrowing rule--ensuring a borrower's
loans are guaranteed by one agency, originated by one lending institution, and held by one
secondary market or lender--and requiring lenders to refinance loans at the borrower's option will
reduce complexity for students. Finally. extending repayment options to include income-
contingent repayment with loan forgiveness will provide more flexibility for borrowers.
The Honorable William F. Goodling
May 1, 1997
Page 5
In addition to the recommendations above, the Committee will explore the issue of interest rate
variation within and between the loan programs at its summer meeting. Any recommendations
resulting from these deliberations will be transmitted to Congress in the fall.
Improving Management, Systems and Contracts
The federal commitment to access to postsecondary education relies on the delivery of federal
student aid--over $40 billion annually. This is an enormously important and complex activity
rivaling many of the largest financial services corporations, including American Express.
Ensuring efficiency, promoting program integrity, and avoiding system failure require an
effective organizational structure, advanced financial systems, and tight contract administration.
Yet the Department continues to conduct its student aid business through an organization without
large-scale financial systems experience and with a dozen, outdated legacy computer systems
that are inordinately expensive--$325 million in FY 1997, vulnerable to fraud and abuse, and
prone to failure. Overlaying this fragmented, inefficient management and systems structure is a
web of large, uncoordinated, uncompetitive contracts which fail to deliver on time and produce
unacceptable cost overruns.
It is imperative that the Department be required to reengineer the systems and contracts that
deliver Title IV student aid. Over the last three years, the Advisory Committee has made several
recommendations to Congress and the Secretary designed to improve the Department's
management. systems and contracts. All of these recommendations have been corroborated and
reinforced by independent studies by the Department's Inspector General (IG) and the General
Accounting Office (GAO). But the Department has to date rejected the most important
recommendations. Thus, there is growing public sentiment, including the reauthorization
recommendations submitted by the American Council on Education (ACE), that Congress
consider "fundamental changes in the way student aid is delivered." In delivering its
recommendations, ACE stated that the Department's systems do not provide the information
necessary for effective decisions, are not customer friendly, and the administrative costs for both
the Department and institutions are inordinately high and unnecessary. Concern about the
Department's management has caused some to propose taking responsibility for Title IV delivery
from the Department.
While the Advisory Committee feels that alternative structures should be explored, our members
continue to believe that the management of Title IV systems and contracts should remain within
the Department. Both the Committee and the IG have recommended that the Department
implement a performance-based organization under a nonpolitical chief executive officer (CEO)
The Honorable William F. Goodling
May 1, 1997
Page 6
with full personnel and contractual authority. If the Department refuses to restructure in this
manner--and is not required to do so by law--little progress will be made in modernizing its
systems.
I want to thank you for the opportunity to submit our suggestions. Our Committee recognizes and
appreciates your dedication to improving and strengthening American higher education.
An identical version of this letter has been sent to Congressman William Clay and the Committee
on Labor and Human Resources. If our Committee can be of further assistance, please contact our
staff director, Dr. Brian Fitzgerald at 202-708-7439.
Sincerely,
Dr. Robert E. Alexander
Chairperson
Enclosure
cc:
Advisory Committee members
The Committee on Education and the Workforce
The Committee on Labor and Human Resources
The Honorable Richard W. Riley
The Honorable Marshall S. Smith
The Honorable Judith A. Winston
The Honorable David A. Longanecker
Ms. Maureen A. McLaughlin
Ms. Elizabeth M. Hicks
HEA REAUTHORIZATION RECOMMENDATIONS
Advisory Committee on Student Financial Assistance
Improving Access
Require a comprehensive federal strategy to ensure equal access to higher education.
Define and measure access in terms of shortfalls in participation by family income.
Develop specific national targets for increasing participation rates by family income.
Link specific program enhancements to well-defined national access targets.
Establish a system for tracking at-risk students through the entire educational sequence.
Monitor and evaluate progress at each stage against specific national targets.
Report to Congress annually on progress in improving participation by family income.
Require dissemination of early information on how financial aid reduces college costs.
Require an easy and accessible system of early eligibility determination.
Improve federal outreach efforts through the TRIO, HEP and CAMP Programs.
Support remediation through Title IV programs at postsecondary institutions.
Reaffirm the federal commitment to maintaining and expanding state grant aid.
Improving Application and Eligibility Determination
Require implementation of an electronic application and signature.
Further streamline the reapplication process through adoption of a master application.
Explore opportunities to improve the simplified needs test.
Improve treatment of dependent student earnings and single independents in need analysis.
Improving both the FFELP and the FDLP
Develop an electronic, multi-year line of credit promissory note.
Eliminate loan disbursement limitations.
Improving the FFELP
Utilize the Free Application for Federal Student Aid (FAFSA) as the loan application.
Integrate the Federal Family Education Loan Program (FFELP) into Title IV delivery.
Implement a single source borrowing rule for students.
Require lenders to refinance loans at the borrower's option.
Include an income contingent repayment option.
Improving Department of Education Management Systems and Contracts
Require reengineering of Title IV systems and contracts for efficiency and integrity.
Restructure management using a performance based organization led by a nonpolitical CEO.
Page 1
February 1997
Dear NASFAA Member:
On behalf of NASFAA's Reauthorization Task Force, we enclose a second set of NASFAA's
preliminary reauthorization recommendations for your review and comment. These
recommendations tackle more controversial issues, identified though NASFAA's hearings and
extensive member comments.
As you know, for over a year, NASFAA's Reauthorization Task Force has held numerous
meetings and conference calls; reviewed the Higher Education Act (HEA) section-by-section;
conducted thirteen reauthorization hearings across the nation this past fall; and has sought
member comment throughout its deliberative process. The Task Force mailed its first set of
reauthorization proposals for comment in October 1996. These were approved by the Board of
Directors in November 1996 and transmitted to the Congress in early February 1997.
This document contains 54 recommendation topics labeled numerically with
sub-recommendations labeled alphabetically. We encourage your comments on all
recommendations presented, but especially on the first two issues presented in this paper: the
grant/loan package and the FFEL\ Direct Loan Program "level-playing field" recommendations.
The recommendations in these issue areas are complex and multifaceted. In addition, at the
end of each major Title IV program area, we have included those recommendations that have
been approved by NASFAA's Board of Directors which have been transmitted to the Congress.
The Task Force, while completing a major portion of its work with publication of this document
for membership comment and Board of Directors action, continues to consider other new
issues that are not addressed in these recommendations or in those already transmitted to the
Congress. In March, the Task Force expects to forward to you this third set of additional
recommendations.
The NASFAA Board of Directors will consider these recommendations at its April 1997 meeting.
The critical element throughout this whole process is your continued input. We hope that you
will comment on these recommendations by e-mail at the Task Force address
([email protected]) or fax your replies at (202/785-1487) by March 7, 1997. We
understand that we are asking for a very quick response, but, in addition to this printed version,
this document was also posted on PEN. Our continued goal is to make NASFAA's process as
open as possible so that our recommendations represent the best ideas and the interests of
student financial aid administrators and students from across the country.
Sincerely,
Signed by
Dallas Martin
John Curtice
President
Reauthorization Task Force Chair
Page 2
KEY TO USING THIS DOCUMENT
This document contains 54 issue recommendations with sub-recommendations. The
54 recommendation topics are labeled numerically with sub-recommendations labeled
alphabetically with numerical subdesignations, if necessary, following. The preliminary
recommendations the Task Force is requesting comment upon are in this typeface
"Times New Roman."
In order to give the membership a fuller picture of the total NASFAA reauthorization
recommendation package, we have included 56 issue recommendations with
sub-recommendations that have already been approved by the NASFAA Board of
Directors and has been transmitted to the Congress. These previously approved
recommendations are in this typeface "Helvetica." Old and new recommendations are
clearly marked by designations at the beginning and end of each section of previously
approved recommendations in the Helvetica typeface.
Contact any of the following Reauthorization Task Force (RTF) members for additional
clarification
John Curtice, RTF Chair; SUNY System Administration, NY; 518/443-5474; [email protected]
Georgette DeVeres; Claremont McKenna College, CA; 909/621-8356;
[email protected]
Sally Donahue; Harvard Law School, MA; 617/495-4606; [email protected]
Joyce Hall; Purdue University, IN; 317/494-5090; [email protected]
Dan Klock; Lenoir-Rhyne College, NC; 704/328-7304; [email protected]
Elaine Neely-Eacona; Educational Medical, Inc., GA; 770/475-9930; [email protected]
Paul Phillips; California State University, San Marcos, CA; 619/750-4852;
[email protected]
Claire "Micki" Roemer; Tarrant County Junior College, TX; 817/882-5353; [email protected]
Glenn "Skip" Sharp; Northwest Kansas Technical School, KS; 913/899-3641
Carlia Sproles; Hendrix College, AR; 501/450-1368; [email protected]
Jerry Sullivan; University of Colorado at Boulder, CO; 303/492-5628;: [email protected]
Irv Bodofsky; Commission Director; SUNY Health Science Center, NY; 315 464-4329;
[email protected]
Larry Zaglaniczny, Ken McInerney, and Marty Guthrie are the NASFAA staff liaisons to the Task Force.
They can be reached at the NASFAA Office by e-mail ([email protected]) or phone (202/785-0453) or
by fax (202/785-1487)
Page 3
Preliminary Recommendations of NASFAA Reauthorization Task
Force
Part Two
February 1997
1. Grant/loan package. (Several sections of the Act)
Recommendations:
Change Federal Pell Grant Program as follows:
a. Authorize the Federal Pell Grant Program as a true entitlement program.
b. Increase authorized Federal Pell Grant maximum award to $5,000.
C. Increase maximum by $200 per year for length of authorization.
d. No change in Federal Pell Grant minimum award at this time.
e. Oppose front-loading of Federal Pell Grants.
f. Oppose any cap on the number of students or years.
Change the Federal loans programs (FFELP and Direct Loan Program) as follows:
For undergraduate borrowers
g. Provide $5,500 base loan amount for each undergraduate year, eliminating
differential loan amounts by class year.
h. Provide for additional unsubsidized loans a maximum of $5,500, i.e. independent
undergraduates/PLUS denial borrowers for each undergraduate year.
1. Increase loan maximums by $300 in the third and fifth years of the authorized bill.
j. Set aggregate base loan limit of $28, 700.
k. Permit schools to approve a lower loan maximum than that provided in the Act,
except
schools could not reduce the PLUS limit (Note: already approved by
NASFAA
Board of Directors).
For graduate and professional student borrowers
1. Provide $10,000 base loan.
m. Allow for additional unsubsidized loan maximum of cost of attendance minus other
aid.
n. Increase base loan by $500 in third and fifth years of the authorized bill.
O. Set aggregate base loan limit of $80,700 (including undergraduate borrowing).
For PLUS Loan borrowers
p. Retain PLUS gateway without change (e.g. allow unsubsidized loan eligibility for
dependent students whose parents are denied a PLUS loan).
q. Retain current PLUS adverse history requirement and reject credit checks or
debt-to-
income tests.
r. Retain PLUS loan limit unchanged, except that financial aid administrators would not
be
permitted to establish a lower PLUS limit (Note: already approved by NASFAA
Board
of
Directors).
Rationale and background: The Task Force struggled with grant/loan imbalance,
student debt burden, accessibility, and related issues. After much thought and debate,
Page 4
the Task Force makes this comprehensive proposal for consideration by the
membership to strike a balance and symmetry in this area that would better serve
students and schools and make programmatic sense. The Federal Pell Grant and
federal student loan recommendations are a complementary policy package and the
Task Force urges their consideration as a total plan to assist in financing a
postsecondary education.
Twenty years ago the Federal Pell Grant maximum award was set at $1,400. In last
year's appropriation (FY-97), the maximum award was set at $2,700. The award has
not kept pace with inflation. The Federal Pell Grant Program's purported purpose to be
the foundation of award packages for students and families of limited economic means
has diminished. Last month, the Washington Post noted in an news story, "The
purchasing power of the Pell Grant has fallen 37 percent since 1980, according to the
Department of Education." President Clinton has recommended a $300 increase for
FY-98 in the maximum award bringing it to $3,000. The Post article continues, "If the
expansion recommended by Clinton is approved by the Congress, the value of the
award would still be 27 percent less than it was worth in 1980."
Through this proposal, the Task Force presents the Congress with appropriate policies
to ensure access to postsecondary education for the five years covered by this
reauthorization bill. Some may argue that Congress will never create a true entitlement
for the Federal Pell Grant Program. The Task Force notes in the 1992 reauthorization
both the House and Senate authorizing committees reported bills containing a Federal
Pell Grant entitlement. Further, the Task Force believes that, if the grant/loan
imbalance is to be corrected, then there needs to be an assurance of funding and an
entitlement program is the only conceivable legislative option. The Task Force also
notes President Clinton recommended creation of a new postsecondary student
assistance entitlement program targeted on middle-income Americans. The
Administration's tax entitlement proposals would implement both a $1,500 tax credit
(Hope Scholarships) and $10,000 tax deduction for postsecondary expenses. The
Task Force believes if middle-income citizens are to receive the benefits of a tax
expenditure entitlement program such as the president proposes, then low-income
families should have access to Federal Pell Grant Program funds that are guaranteed
and not subject to vagaries of the congressional appropriations process. The Task
Force suggests that low-income Americans should have the same federal entitlement to
Federal Pell Grant assistance that the president would guarantee through the tax
system for middle-income Americans.
Grants
On the grant side of the equation, the Task Force is recommending policies that
address access to postsecondary education and an assurance of grant funding for the
five-year life of the reauthorization legislation. It also takes into consideration the reality
of college costs now and in the future.
The recommended increase in the Federal Pell Grant maximum award to $5,000 and
Page 5
the $200 annual increase in the maximum thereafter is based on past NASFAA Federal
Pell Grant reauthorization proposals. The $5,000 recommended maximum award
amount accomplishes two purposes. First, it recognizes the necessity to increase
grant funding for students, not only to redress the reduction in purchasing power of
Federal Pell Grants, but also to redress the shift away from grants to loan funding for
many Title IV aid recipients. This figure also presents the Congress with a maximum
award level that realistically represents the essential need of students for Federal Pell
Grant funding given where college costs are now and, in the future, if this program is
truly to be the foundation of aid packages.
The Task Force does not recommend an increase in the minimum Federal Pell Grant at
this time, but recognizes that the level of the minimum Federal Pell Grant may be
adjusted in reauthorization. This may occur when the debate is joined regarding the
income groups served by Title IV programs and the President's tax proposals, e.g. the
HOPE Scholarship $1,500 tax credit and $10,000 deduction for postsecondary
expenses.
The Task Force opposes caps, either on the number of students served or a limitation
on years, in the Federal Pell Grant Program. Recent congressional appropriations bills
have capped the number of students eligible for the program. Fortunately, those caps
have not been breached, but if they were, then the program would be turned into a
first-come, first-served program which would disadvantage late filers. The Task Force
considered and, then, rejected turning the Federal Pell Grant Program into a
front-loaded program. The Task Force believes if this proposal is accepted by the
Congress, that decision would do much to redress the grant\loan imbalance and reduce
student debt burdens without the acute restructuring of the aid system resulting from
front-loading Federal Pell Grants.
Loans
For federal student loan policy affecting both the FFEL and Direct Loan Programs, the
Task Force, again, reiterates its cautionary note that the loan recommendations cannot
be considered out of context. The loan recommendations are part of a package that
complement the Federal Pell Grant recommendations.
For undergraduate students, the Task Force recognizes that the cost of education for a
first-year or second-year student is no less than that for juniors and seniors. Costs for
first-year students may even be higher than for other classes since there are one-time
purchases that are not repeated. The point is freshman and sophomores have the
same tuition, room and board, and academic supply costs as upperclassmen.
Consequently, the Task Force recommends eliminating loan maximums in the FFEL
and Direct Loan Programs determined by year of study. Instead of three Stafford
annual loan limits, the Task Force recommends a base-year loan maximum of $5,500
per year for all undergraduates. Therefore, undergraduate annual loan limits would be
consistent during a borrower's program of undergraduate study. Similarly, additional
undergraduate unsubsidized loan availability would be capped at $5,500 per year under
Page 6
the Task Force proposal. To account for increases in college costs, the Task Force
suggests these annual limits (base year/additional unsubsidized) rise by $300 in the
third and fifth years of the reauthorized HEA.
Sensitive to arguments that students are borrowing too much, a Task Force
recommendation, already approved by the NASFAA Board of Directors, assists in this
matter. That recommendation would allow postsecondary institutions to set lower
annual loan maximums on an institution-wide basis or by program or by class year.
Thus, schools will have the ability to annually set loan limits that are lower than those
allowed under the HEA. Several sample explanations of the flexibility allowed under
this proposal follow.
For example, the base federal loan limit is $5,500 and School W sets its base loan limit
at $3,000. School X may decide the base loan limit of $5,500 is appropriate, but may
decide to set a $0 additional unsubsidized loan limit--in other words, the school has
determined that its students will be eligible only for subsidized Stafford loans and that
School X will not participate in the unsubsidized loan program. School Y has decided
for one of its eligible programs with lower costs due to its length will have a base loan
limit of $3,500 while all its other eligible programs are set at the full federal maximum of
$5,500. School Z may decide that it wishes to use its own resources and front-load its
grants for freshmen and sophomores and allow juniors and seniors to borrow more.
Consequently, School Z sets its base loan limit at $2,000 with the additional
unsubsidized Stafford set also at $2,000 for freshmen and sophomores. School Z
under its grant-front loading policies would allow juniors and seniors to have the full
federal loan limit levels, $5,500 base year and $5,500 additional unsubsidized loans.
This Task Force recommendation gives schools the greatest flexibility to structure
annual loan limits and institutional packaging policies and, at least, where loan limit
policy is concerned breaks the "one size fits all" annual loan limit policy as is currently in
the HEA. The Task Force recognizes this proposal to limit borrowing will result in a
need for increased communication and consumer information for students, parents, and
high school guidance counselors explaining the differences in costs of schools and the
loan maximum policies selected by postsecondary institutions.
In making these recommendations the Task Force suggests that increasing loan limits
for first- and second-year borrowers will allow many students to stay within one federal
loan program and not turn to private sector, non-federal loans. It also notes that loan
limits for freshmen are at the level set by the 1986 HEA reauthorization. The Task
Force recommends modest and responsible increases in these annual loan limits of
$300 in the third and fifth years covered by this reauthorization legislation for both
programs (subsidized and unsubsidized) to address necessary adjustments for inflation.
The Task Force proposal meets the needs of graduate and professional students with a
modest increase in the base year loan limit to $10,000. The additional unsubsidized
loan program would be limited to cost of attendance minus other aid which would allow
graduate and professional students, by-and-large, to borrow from the federal loan
Page 7
programs and avoid private loans. In the third and fifth years covered by this
reauthorization, the base year limits of $10,000 would rise by $500 each year. Again,
graduate school financial aid administrators would have the same ability to implement
loan limits lower than those authorized in the HEA as would undergraduate aid
administrators under the Task Force proposal.
Following from these annual loan limits, the Task Force would set the undergraduate
base year aggregate loan limit at $28,700 and the aggregate base loan limit of $80,700
for graduate and professional students. The Task Force recognizes aggregate loan
amounts would necessarily need to be increased in the years after the five-year
effective span covered by this reauthorization due to the third and fifth year increases in
loan amounts as proposed by the Task Force. Another NASFAA reauthorization
committee and Congress would need to consider such action at that time. However, if
grant aid rises during the period of a reauthorized Act, as proposed by the Task Force,
then such a change in aggregate loan limits may not be needed.
The Task Force makes no change in the HEA governing the ability of dependent
students to borrow unsubsidized loans if their parents cannot borrow the full amount of
a PLUS loan or are denied such a loan. The Task Force finds little evidence that the
current system is not working regarding PLUS borrowing and, therefore, recommends
neither a change to institute credit checks nor debt-to-income ratio tests as a
prerequisite to obtaining a loan leaving the current adverse history requirement in place.
The Task Force also would not place an annual limit on PLUS borrowing.
The Task Force is interested in the membership's views of this grant and loan package
recommendation. The Task Force has listened to the comments of the membership in
this area and has attempted to craft a balanced and complementary policy--a policy that
recognizes the realities of postsecondary finance, the debt burdens of borrowers, the
need for grant dollars and the assurance of such funding, and the responsibilities of all
partners in meeting the financial needs of families and students.
2. Level playing field issues between FFEL and Direct Loan Programs. (Parts B,
D, and other sections of the Act)
Note: Unless otherwise noted, recommendations below apply to both the FFEL
and Direct Loan Programs.
2a. Participation in William D. Ford Direct Loan Program (Section 453 and several
other sections of the Act)
Recommendations: The Task Force makes the following recommendations regarding
participation in the FFEL and Direct Loan Programs.
1) Prohibit any limit or cap on institutional participation in Part B or D program.
2) Allow schools the freedom to choose which federal loan program to participate in.
3) Prohibit conscription into either program.
4) Prohibit student authority to select either a FFEL or Direct Loan.
Rationale: The Task Force recommends maximum freedom in the choice of institutional
participation in either the Part B or Part D loan programs. It opposes efforts to limit or
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cap participation in either loan program since schools will choose whichever loan
program best meets the needs of its students and the institution. As an analogous
principle, the Task Force recommends clarifying the law so that schools cannot be
drafted by any means to participate in either loan program or be arbitrarily terminated
from participation in one program or another without cause.
Finally, the Task Force opposes legislative efforts which would allow student borrowers
to select whichever loan program they may wish. Allowing students at a FFEL Program
school to select a Direct Loan (or vice versa) would result in severe administrative
complications, errors, and costs as schools try to administer two loan programs.
However, if another Task Force recommendation is approved, then student borrowers
could select either program to consolidate their loans.
2b. Lender discrimination (Section 421 (a)(2))
Recommendation: Prohibit lenders from not lending to particular schools or students
and prohibit lenders from requiring procedures, administrative measures, or fees based
on the type of school. Applies only to FFELP.
Rationale: The Task Force believes that any lending participant in the FFEL Program
must not discriminate among schools or students in their lending or administrative
practices (such as requiring different procedures, administrative measures, or fees
based on the type of school or student body served). The Task Force believes if a
lending institution wishes to participate in the Title IV loan programs, then it must lend
to all eligible students attending all eligible postsecondary institutions. Acceptance of
this recommendation would prevent the so-called "creaming" of low-risk borrowers and,
finally, end what many see as discrimination in the FFEL Program.
2c. FAFSA use for FFEL Program (Section 483(a))
Recommendations: 1) Permit the FAFSA to be used for FFELP application.
2) Minimize number of data elements resulting from 1).
Rationale: The Task Force recommends that the FAFSA be used as the application for
the FFEL Program. This recommendation would benefit students by simplifying the
Title IV application process and is essential to equalizing the treatment of both loan
programs. However, the Task Force also recommends that in accomplishing this
service for students, schools, and lenders that the complexity of the form and number of
data elements be kept to the smallest level necessary to provide needed data.
2d. Repayment incentives (New section)
Recommendations:
1) Allow an immediate interest rate reduction of 25 percent for borrowers who choose
to repay their loan by direct deposit.
2) Modify HEA so that by repaying a loan consistently and on-time for four years
borrower's interest rate is reduced by 2 percent.
3) Prohibit all other incentives to borrowers, including repayment incentives, not
authorized by the HEA, unless expressly approved by the Congress. Apply provisions
1) and 2) for new loans and implement one year after the date of enactment of the
reauthorized HEA.
Rationale: The Task Force suggests borrowers benefit from either efficiencies of
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repayment or for on-time and consistent repayment of their loans. The Task Force
believes this would result in higher loan repayment rates and that borrowers should be
encouraged and benefit from appropriate and responsible behavior. Direct deposit
could be automatic from a borrower's personal checking account or accomplished by
their employer from the borrower's compensation or by other Electronic Funds Transfer
methods. Four year consistent loan repayment may be accomplished using the
suggested direct deposit method or by the normal means of loan repayment selected
by borrowers, e.g. writing and mailing a check. At the same time, any further
inducements, including repayment incentives, offered by the private sector or the
Department and not approved by the Congress would be banned to preserve level
playing field principles.
2e. Consolidation FFEL and Direct Loan Programs (Section 428C)
Recommendations: 1) Allow Direct Loans to be consolidated into FFELP consolidation
loans, but without the special lender subsidy for the Direct Loan portion.
2) Require FFELP consolidation loans be on the same terms as the Direct Loan
Program, e.g. a variable interest rate capped at 8.25 percent.
Rationale: The Task Force makes the above recommendation as part of a level playing
field initiative to provide the same terms and conditions for both the FFEL and Direct
Loan Programs.
2f. Students ability to change repayment plans (Section 455(d)(3))
Recommendation: Retain current ability of students to change repayment plans.
Rationale: Students should have the ability to annually change their repayment plans as
they may under current law. The Task Force believes this flexibility is useful for an
individual who develops cash flow problems or, conversely, whose personal economic
situation has positively changed and needs a different loan repayment plan that better
suits his or her financial situation.
2g. Guarantee fee and federal financing (Several section of the Act)
Recommendation: Eliminate 1 percent guarantee fee paid by students in the Part B and
D programs and provide by the federal government such lost payments for guaranty
agencies.
Rationale: The Task Force makes this recommendation to benefit students in both the
FFEL and Direct Loan Programs. It believes the purpose of this fee is the responsibility
of the federal government and not students. The Task Force recommends eliminating
this fee paid by students and that the federal government provide guaranty agencies
such necessary payments lost by the elimination of borrower payment of the fee.
3. Block Grants
General recommendation for campus-based programs, specifically, and for Title IV,
generally: Oppose any block grant proposal.
Rationale: The Task Force believes the current decentralized system inherent in the
campus-based programs does meet many objectives of proponents who argue federal
student aid should be "block granted." The Task Force opposes proposals to block
grant campus-based or other federal student aid. The Task Force is concerned that
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proposals to block grant federal student aid only would lead to increases in
administrative complexity on campus or in dealing with other agencies administering
such block grants. If history is any guide, then the Task Force further is concerned that
prior block grant legislation enacted by previous Congresses has led to decreased
appropriations for those programs which were "block granted."
Federal Pell Grant Program
4. Federal Pell Grant disbursement (Section 401(e))
Recommendation: Retain the current regulatory treatment of Federal Pell Grant
disbursement. Rationale: The Task Force believes giving students the option of
determining whether their Pell disbursement is to be made over a traditional academic
year or should include the summer session would greatly complicate Title IV
administration on campus. Such an action would provide limited benefits to a small
population and, therefore, the Task Force recommends retention of the current
regulations and would not make such a change in the HEA.
Federal Pell Grant Program and other Part A recommendations
already approved by NASFAA Board of Directors
and transmitted to the Congress
Numbers 1-12 as follows:
1. Issue: Federal Pell Grants for less than half-time students (Section 401(b)(2)(B))
Recommendation: Retain provision.
Rationale: NASFAA recommends retaining the statute allowing less than half-time
students eligibility for Federal Pell Grants. NASFAA suggests that this authority is
valuable for those schools whose mission, in part, is to serve such students.
2. Issue: Purpose and amount of grants (Section 401(b)(6), (7), (8))
a. Recommendation: Eliminate provision permitting two Federal Pell Grants in a single
award year.
Rationale: While this provision may be useful in serving some students, in an era of
tight appropriations, NASFAA recommends striking this provision as an economy
measure.
b. Recommendation: Retain provision permitting higher grants for study abroad in
specified circumstances.
Rationale: Retaining this provision will permit higher Federal Pell Grants for students
studying abroad whose costs may be greater than those for on-campus students.
NASFAA suggests this provision is a useful tool for aid administrators and enables
them to better serve this group of students. This provision allows needy students the
opportunity to study abroad and ensures that these opportunities are not limited to more
economically advantaged students.
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3. Issue: Period of eligibility for grants (Section 401(c))
Recommendation: Retain current length of eligibility provision.
Rationale: NASFAA considered options for change of this provision and concluded that
the time frame in the current law gives students necessary flexibility to complete their
programs of study.
4. Issue: Distribution of grants to students (Section 401(e))
Recommendation: Permit credits to students' accounts for books and supplies as well
as tuition and fees and room and board.
Rationale: Allowing schools to credit students' accounts for verifiable charges for books
and supplies would better serve students. This permissive language gives schools the
option of streamlining operations and could be exercised without the student's
permission. In the case of charges to book store accounts, NASFAA believes that
students essentially "authorize" the payment of these charges through the initiation of
the purchase.
5. Issue: Insufficient appropriations (Section 401(g))
Recommendation: Require the Secretary to seek needed funds if appropriations are
insufficient.
Rationale: Under current law the Secretary informs the Congress of a Federal Pell
Grant shortfall. The suggested change mandates that the Secretary and the
Administration seek supplemental funding for any shortfall rather than reduce student
awards.
Subpart 2: Federal Early Outreach and Student Services Programs
Chapter 2: National Early Intervention Scholarship and Partnership Program
6. Issue: Scholarship Component (Section 404D(c))
Recommendation: Prohibit scholarship plus other student financial assistance awarded
using the eligibility determination system under Part F of this Title from exceeding
student's federal program eligibility.
Rationale: While it may be generous to exclude such scholarships for the purpose of
awarding other Title IV aid, NASFAA suggests that all sources of aid should be
considered when awarding Title IV assistance to extend limited federal funding. The
benefit afforded by this provision should be suspended to better serve all recipients of
federal aid.
Chapter 3: Presidential Access Scholarships
7. Issue: Amount of award (Section 406B)(a)(1))
Recommendation: Increase maximum award to the greater of 50% (from 25%) of the
recipient's Federal Pell Grant award or $400.
Rationale: NASFAA suggests that doubling the percentage to expand the program's
reach and to benefit such students would be a desirable public policy purpose.
8. Issue: Period of award (Section 406B(b))
Recommendation: Remove cumulative year limitations; instead permit awards for the
period required to complete an undergraduate degree.
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Rationale: NASFAA views this time limitation as arbitrary and instead suggests the time
eligibility requirement for this scholarship parallel that for the Federal Pell Grant
Program.
9. Issue: Assistance not to exceed cost of attendance (Section 406B(d))
Recommendation: Change "cost of attendance" to "amount of eligibility as determined
under Part F."
Rationale: NASFAA suggests all sources of aid should be considered when awarding
Title IV assistance to extend limited federal funding. Therefore, prohibiting scholarship
assistance from exceeding the student's need will better serve all recipients of federal
aid.
10. Issue: Requirements for students in first year of postsecondary education
(Section 406C(a))
Recommendation: Eliminate option for student to participate in an eligible early
intervention program as part of eligibility requirements.
Rationale: NASFAA recommends the elimination of this provision, since early
intervention programs are not widely available to potential scholarship recipients and,
therefore, would limit the number of individuals qualified for this program.
11. Issue: Student eligibility (Section 406E(a))
Recommendation: Eliminate requirement that student enroll or be admitted for
enrollment within 3 years of high school graduation or receipt of equivalent certificate.
Rationale: The three-year limitation is incompatible with providing desirable flexibility to
individuals whose enrollment in this program is delayed for reasons beyond their control
(e.g., the ineligibility of an individual who meets all other program requirements, but
must work for four years after high school graduation due to an illness of a parent.)
12. Issue: Chapter 6 National Student Savings Demonstration Program (Section
410A)
Recommendation: Retain language.
Rationale: Although this program has not received funding, NASFAA suggests it has
potential to encourage savings for college and should be reauthorized and funded.
End of previously approved recommendations for this section of the law. New
recommendations follow.
Federal Supplemental Educational Opportunity Grant Program
5. Federal SEOG Exceptional Need/Federal Pell Eligibility Criteria in HEA (Section
413C(c)(2))
Recommendation: The Task Force is split over the issue of tying the awarding of
Federal SEOG to Federal Pell Grant eligibility and requests the opinion of the
membership on what is the best course to take.
Option A. Retain current HEA treatment (e.g. the link between Federal SEOG and
Federal Pell Grants.)
Option B. Same as Option A, except eliminate ranking by EFC.
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Option C. Change HEA so that no less than 90 percent of FSEOG recipients are
Federal Pell Grant eligible.
Option D. Change HEA so that no less than 75 percent of FSEOG recipients are
Federal Pell Grant eligible.
For Options B, C, and D, schools would have authority to define exceptional need and
may even utilize such definition on a campus-wide basis, on a program-by-program
basis, or use professional judgment in this matter on a case-by-case basis. In no case
would the Secretary have regulatory control over a school's definition of exceptional
need for the Federal SEOG program.
Rationale: The Task Force discussed the linking of Federal SEOG to Federal Pell
Grants and the exceptional need definition in the HEA at length. Some Task Force
members believe the current HEA Federal SEOG treatment developed by the Congress
is appropriate and targets the neediest of students. Other Task Force members
suggest that some needy students are denied Federal SEOG assistance, and in some
cases, are needier than Federal Pell Grant recipients. They suggest schools should
have some flexibility in awarding these funds. Other Task Force members are
sympathetic to the flexibility argument, but are concerned about the appropriate amount
of flexibility to be given a school and, at the same time, meet congressional objectives
that Federal SEOG serve low-income students. Therefore, the Task Force asks the
NASFAA membership for its opinion on the proper recommendation to make to the
Congress.
6. FSEOG match (Section 413C(a)(2))
Recommendation: Retain current Federal SEOG campus match.
Rationale: The Task Force believes the current federal/school partnership as exhibited
by the campus FSEOG match is appropriate and should continue unchanged.
7. FSEOG for graduate students (Section 413B(b))
Recommendation: Oppose permissive language to make available FSEOG funds for
graduate students.
Rationale: The Task Force opposes any recommendation that, while permissive, would
allow graduate students to be FSEOG eligible. While the Task Force recognizes the
important benefits of graduate study and, also, recognizes the special financial needs of
graduate/professional students, it notes FSEOG historically has provided access for
undergraduates and that Title IX of the HEA provides special assistance for
graduate/professional students. The Task Force suggests that FSEOG funds already
are limited and the program should continue as an undergraduate-only program to help
reduce undergraduate debt burden and provide access to an undergraduate
postsecondary education. The Task Force is concerned that extending FSEOG to
graduate students only would increase pressures on financial aid offices from graduate
school officials and, thereby, undergraduate students would lose limited campus
FSEOG funding. Finally, the Task Force recognizes that FSEOG is gift aid and that
graduate/professional students all are considered independent students under the
Federal Methodology leading to difficulties in assessing need of individuals in this class
of students.
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FSEOG Recommendations already approved by NASFAA Board of
Directors and transmitted to the Congress
Numbers 13-16 as follows:
13. Issue: Purpose of Subpart (Section 413A(a))
Recommendation: Expand purpose statement by adding: "These grants continue to
positively impact needy individuals to chose higher education as the gateway to
realizing their own potential."
Rationale: NASFAA recommends adding this legislative language to strengthen the
FSEOG purpose section.
14. Issue: Amount of grant (Section 413B(a))
Recommendation: Retain current minimum and maximum FSEOG award amounts.
Rationale: Few postsecondary institutions currently award large numbers of students
the maximum FSEOG allowable under law. NASFAA suggests the current minimum
and maximum award amounts continue to be fair, reasonable, and appropriate policy
for the FSEOG Program.
15. Issue: Use of funds for less-than-full-time students (Section 413C(d))
Recommendation: Eliminate percentage references to less than full-time or
independent students.
Rationale: NASFAA concludes grants must be available to these students if they are
considered in the allocation data provided to the Secretary as required in current law.
The required monitoring, however, increases administrative burden with little advantage
to the intended beneficiaries.
16. Issue: Use and transfer of funds for administrative expenses (Section 413C(e))
Recommendation: Reinstate the ability to transfer FSEOG funds to other
campus-based programs.
Rationale: Schools should have the flexibility to arrange their campus-based programs
to best meet the needs of their student population. Such authority could be tied to a
school's level of institutional grant funding. For example, if FSEOG represents a very
small portion of the school's total gift aid, such transfer authority could enable the
school to boost other campus-based programs such as FWS, if student needs so
dictated.
End of previously approved recommendations for this section of the law. New
recommendations follow.
State Student Incentive Grant Program
8. SSIG Subpart 4
Recommendation: Approve a higher education community recommendation to continue
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the SSIG Program and modify SSIG to enhance federal/state funding.
Rationale: The Task Force supports continuation of the SSIG Program believing it is an
important student aid program linking state and federal support of student financial aid.
The Task Force rejects arguments that the program has served its original purpose.
The Task Force agrees with many in the higher education community and, with some in
the Congress, that SSIG should be modified to better serve its original purpose and that
purpose be expanded to include new activities to serve students and recognize a more
diverse mission of state-provided assistance. The HEA would be changed so that
whenever SSIG federal funding exceeds $45 million, then states are required to match
such addition funds two state dollars for every federal dollar. Such enhanced matching
could be used for additional SSIG funding of student aid as is currently the practice or
such additional funding could be utilized for the following activities: academic/merit
bonus programs; transition to college/collegiate skills enhancement programs; early
intervention programs; and/or state work-study programs.
The Task Force recommends monies for these new purposes be need based for
students and not be used for program administrative expenses. The increased state
matching funds for the new activities proposed would provide more "bang for the buck."
Again, states would not be required to provide funds for such activities; they could
increase their current program funding.
Part B Federal Family Education Loan Program
Note: Given the structure of the Act and the art of placement of legislative
language in the Act, unless otherwise noted, the following FFELP
recommendations also apply to the Federal Direct Loan Program as well.
9. Student loan interest rate (Section 427A and 455(b))
Recommendation: Maintain current interest rate structure and formula, unless lower
rate structure and formula is a viable option.
Rationale: The Task Force recommends continuation of the current interest rate
structure for both the FFEL and Direct Loan Programs. If viable alternatives develop in
the reauthorization process, then the Task Force recommends NASFAA work for such
lower than current interest rates for student borrowers.
10. Loan subsidies (Sections 427(a)(2), 428, 428B(d), 428C(b) & (c), 428H, 428J,
437, 437A, and 455)
Recommendation: Retain current loan subsidies to students, including but not limited to
in-school subsidy, grace period, etc.
Rationale: The Task Force supports the continuation of the federal student loan
subsidies in the belief that they are appropriate student benefits. Several of these
subsidies, if eliminated, would increase student loan debt and others help students
remain in-school free of additional costs.
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11. Denial of loan or lower amount of loan (Section 428(a)(2)(F))
Recommendation: Relocate financial aid administrator authority to reduce/deny loans to
Section 479A.
Rationale: The Task Force believes this provision is better placed in Section 479A of
the Act along with other professional judgment HEA provisions. This will, the Task
Force believes, strengthen the ability of financial aid professionals to exercise their
judgment in this regard. Also, it can provide borrowers with better counseling and can
become a more effective debt management tool.
12. Loan proration (Section 428(b)(1)(A))
Recommendation: Apply loan proration only to a program of study of less than one
academic year.
Rationale: The Task Force believes loan proration is administratively complex and is
mandated by the law, in several cases, inappropriately. The Task Force recommends a
targeted loan proration applying only for students in a program of study that is less than
one academic year. The Task Force believes the current HEA carries proration too far
and that loan proration as a policy is better utilized for this limited class of students and
programs. Other current prorations would be eliminated
13. Automatic in-school deferment (New section)
Recommendation: Allow schools to automatically provide student borrowers an
in-school deferment in the case of individuals returning to their studies.
Rationale: Schools would have the ability to initiate an in-school deferment rather than
continue for students the current confusing process. Under the Task Force proposal,
schools could automatically initiate an in-school deferment for the student. The student
would get a notice from the lender or servicer and could, if he or she chose to do so,
continue to make loan payments.
14. Loan consolidation for married borrowers (Section 428C(a)(3)(C))
Recommendation: Retain current treatment.
Rationale: The Task Force discussed possible modification of the HEA to respond to
equity concerns in the case of borrowers who consolidated their loans and, later,
divorce. After examining a number of alternatives, the Task Force concluded each
alternative either would not meet an equity test in the case of divorced individuals or
would not be realistic when confronting the facts of the legal system and divorce courts.
Therefore, while equity concerns remain, the Task Force believes those are best left to
sorting out in divorce settlements or by the courts. At the same, time the Task Force
continues to believe the option of consolidation for married borrowers is a useful tool, in
certain cases, where each individual is adequately counseled about loan costs and
possible future consequences, including divorce.
15. Forgiveness of grant repayment in the event of death (Section 437)
Recommendation: Allow grant repayment to be waived in event of student's death.
Rationale: Currently loans, including PLUS loans, may be forgiven in the case of the
death of a student. While such cases are rare, the Task Force believes this
Page 17
compassionate act should be extended in the cases where an individual dies and has a
grant repayment pending.
16. Cohort default rate (Section 435)
Recommendations. a) Exempt from cohort default rate provision schools that have
either: 1) less than 10 percent of its enrollment who attend at least half time who
borrow, or 2) the school has less than $50,000 in defaults.
b) Modify the mitigating circumstances provision to permit appeals from schools whose
Pell-eligible population is greater than two-thirds of the school's undergraduate
enrollment. If an institution did prove that its Pell-eligible population is greater than
two-thirds of the school's undergraduate enrollment, then the appeal would be
automatically granted by the Secretary.
Rationale: While the Task Force considered but was unable to find a substitute,
perhaps a more complex, formula or index to measure schools for ineligibility based on
cohort default rates, it would support such a reasonable substitute if one were
developed. The Task Force, however, notes that schools that make an effort to keep
costs down and/or counsel students away from borrowing are penalized under current
law. Such schools should not find their eligibility at risk for such efforts and the Task
Force would grant relief for those institutions by not counting in a three-year cohort
default rate eligibility determination any year when it meets either of the above tests. In
other words, if a school had a default rate of 26 percent in one of the rolling three test
years, but had fewer than 10 percent of its enrollment who attend at least halftime who
borrow or had less than $50,000 in default in that year, then the result would be the
same as if the school had a default rate lower than 25 percent: It does not count toward
making the school ineligible.
Aware that many defaults come from low-income groups often most in need of
educational services, the Task Force would add an additional mitigating appeal
circumstance so as not to punish those schools whose overwhelming mission is the
service of low-income individuals. The Task Force would modify the mitigating
circumstances appeal process under which a school may challenge a default rate
cut-off to include schools whose Pell-eligible population is greater than two-thirds of the
school's undergraduate enrollment. If the school proves this, then the Secretary must
approve such an appeal.
17. Bankruptcy and resumption of Title IV eligibility (Section 437)
Recommendation: Bring to Congress's attention that students who default may become
Title IV eligible if they make 3 or 12 consecutive payments on the defaulted loan
(number depends on the program) At the same time, individuals who discharge their
student loans in bankruptcy are automatically Title IV eligible for new loans.
Rationale: The Task Force would bring to the attention of Congress the disparity in the
treatment of regaining eligibility for Title IV aid between those that default and those
who declare bankruptcy. The Task Force urges a congressional solution to the
bankruptcy/assumption of debt problem, however, federal bankruptcy law precludes a
simple HEA reauthorization solution.
Page 18
18. Choice of lender (New section)
Recommendation: Provide that if a borrower does not indicate a choice of lender, the
school has the authority to select a lender for such borrower. Applies to FFELP only.
Rationale: In those instances when borrowers do not indicate a choice of lender on their
application; schools choose one for the borrower. The Task Force, recognizing that this
is a grey area of the law, would codify this practice. Schools could, then, choose a
lender it believes best serves the interests of the borrower. As is true in current
practice, if the borrower does indicate a choice of lender, then the school would honor
that choice.
19. Loans for remedial students (Section 401(c) and new FFEL/DL Program
sections)
Recommendation: Allow students taking remedial courses Title IV eligibility for the
equivalent of one academic year. This is a modification of an earlier Task Force
recommendation accepted by the NASFAA Board of Directors which only applied to the
Federal Pell Grant Program.
Rationale: The Task Force suggested, and the NASFAA Board approved a
recommendation, that students taking remedial courses have Federal Pell Grant
eligibility for no more than the equivalent of one academic year. The Task Force
modifies this recommendation to apply to all Title IV programs. The Task Force
believes the equivalent of one academic year's Title IV eligibility for remedial
coursework is a responsible limitation. It would encourage students to receive the skills
they need to succeed academically and exclude eligibility for individuals whose
academic deficiencies are too great to overcome after they have had a reasonable
opportunity to attempt a postsecondary education. This recommendation would allow
an individual to take remedial courses beyond one calendar year as long as they did not
continue in remedial courses beyond the equivalent of one academic year's eligibility.
20. Definition of default (New Section paralleling (Section 462(h)(4))
Recommendation: Consider a FFELP/DL student loan in default after 240 days.
Rationale: Currently, loans are considered in default after 180 days for the FFEL/DL
programs and 240 days for Perkins Loans. The Task Force believes such time periods
should be made consistent and recommends the FFELP/DL period increase to the
Perkins Loan level of 240 days. This additional time would allow further due diligence
efforts to continue resulting in greater collections of loans for the federal government
reducing costs to taxpayers.
FFELP Recommendations already approved by NASFAA Board of
Directors and transmitted to the Congress
Numbers 17-36 as follows:
17. Issue: Non-state guarantor activities (Section 422(c)(6)(B)(I))
Recommendation: Require non-state guarantors to also handle electronic inquiries.
Rationale: Non-state guarantors are currently required to handle written and telephone
inquiries within the states that they operate. This recommendation expands that
requirement. Throughout the Higher Education Act, NASFAA recommends changes
Page 19
that will facilitate and encourage the use of electronic technologies and
communications.
18. Issue: Lower institutional loan limits (Section 428(a)(2)(F))
Recommendation: Permit institutions to set lower institutional limits for Part B loans.
Rationale: Instead of the authority in Section 428(a)(2)(F), which permits schools to
refuse to certify (or to reduce the amount of) a student's loan on a case-by-case basis,
NASFAA recommends that each school be given the authority to establish its own
annual loan limits, by program, at or below the maximum established in the HEA.
However, an institution would not be permitted to require a borrower who has additional
Subsidized Loan eligibility under the HEA annual loan limits to borrow an Unsubsidized
Stafford Loan solely due to lower annual loan limits established by the institution. That
is, borrowers must use up all Subsidized Loan eligibility up to the HEA maximum before
they are eligible for an Unsubsidized loan. NASFAA believes this additional authority is
necessary to help schools better manage their default rates.
19. Issue: Required statements to lenders (Sections 428(a)(2)(A)(1)(I) & 428H(b))
Recommendation: Eliminate requirement that borrowers provide certain statements to
their lenders.
Rationale: These sections require the borrower to provide to the lender a statement
from their school which (1) sets forth the student's estimated cost of attendance (COA)
(as determined under section 472) and (2) sets forth such student's estimated financial
assistance (EFA) and (3) certifies the eligibility of the student to receive a loan and the
amount of the loan for which the student is eligible. Given that schools are responsible
for certifying eligibility and maintaining COA and EFA information, NASFAA
recommends that borrowers provide a statement to the lender that certifies only the
student's eligibility to receive a loan and the amount of the loan. Institutions should be
required to make available, at the lender's request, the student's estimated cost of
attendance and estimated financial assistance.
20. Issue: Aggregate limit for teacher certification program students (Section
425(a)(ii))
Recommendation: Permit teacher certification program students who have successfully
completed a program of undergraduate education to borrow up the
graduate/professional student aggregate maximum level.
Rationale: Because the treatment of teacher certification programs varies from state to
state, NASFAA recommends that the eligibility of these students be specifically
referenced to ensure that they will not be precluded from borrowing.
21. Issue: Aid administrator adjustments in loan amount (Section 428(a)(6))
Recommendation: Extend to aid administrators the current law authority regarding
evaluation of a student for a loan.
Rationale: Current law gives lenders certain privileges regarding assessment of a
borrower's financial condition. It specifies that no law can prohibit or require, unless
otherwise specifically provided by law, a lender to evaluate the total financial situation of
a student making application for a loan under this part, or to counsel a student with
Page 20
respect to any such loan, or to make a decision based on such evaluation and
counseling with respect to the dollar amount of any such loan. NASFAA believes that
both financial aid administrators and lenders should have this authority.
22. Issue: Restrictions on guaranty agency activities (Section 428(b)(3))
Recommendation: Extend the current law restrictions on guaranty agency inducements,
mailings and advertising to lenders participating in the part B programs, and extend the
restrictions on unsolicited mailing of student loan application forms to include students
enrolled in postsecondary institutions.
Rationale: To safeguard the interests of students and the integrity of the loan programs,
NASFAA believes that these restrictions should apply to lenders as well as guaranty
agencies. Regarding mailings to students, current law prohibits unsolicited mailings of
student loan application forms to students enrolled in secondary school. NASFAA
believes that unsolicited mailings of application forms to students enrolled in
postsecondary education should be prohibited as well.
23. Issue: Pre-claims assistance charges to schools (Section 428(c)(2)(H)(ii))
Recommendation: Eliminate this authority.
Rationale: NASFAA believes that institutions should not be subject to a fee for helping
to meet lender pre-claim assistance requirements. Imposing a fee could act as a
disincentive for schools to help remind students of their obligation to repay their loans.
24. Issue: Borrowers' forbearance requests (Section 428(c)(3)
Recommendation: Permit borrowers to request forbearance electronically.
Rationale: Throughout the Higher Education Act, NASFAA recommends changes that
will facilitate and encourage the use of electronic technologies and communications.
Current law specifies that borrowers must request forbearance in writing.
25. Issue: Granting forbearance (Section 428(c)(3)(B))
Recommendation: Permit guaranty agencies to consider a borrower's total debt as a
factor in granting forbearance
Rationale: NASFAA believes that forbearance is a valuable tool that can prevent
borrowers experiencing temporary repayment difficulty from defaulting on their loans.
NASFAA believes that guaranty agencies should, to the extent practicable, be
encouraged to consider a borrower's total debt-to-income ratio (not just title IV student
loan debt) when deciding whether to grant a forbearance request.
26. Issue: State share of default costs (Section 428(n))
Recommendation: Delete provision
Rationale: NASFAA recommends striking the provision requiring states to pay the
federal government a fee for any postsecondary institutions that have a cohort default
rate above 20 percent. Current anti-default measures are working to bring down default
rates and this provision would do little to reduce defaults and may, by draining
resources used in default prevention currently, actually be counterproductive.
Page 21
27. Issue: Single disbursement of loans for short loan periods (Section
428G(a)(1))
Recommendation. Permit single disbursement of loan if the loan period is one
semester, trimester, quarter, or 4 months.
Rationale: NASFAA believes that requiring multiple disbursements of loans for short
loan periods creates undue and unnecessary hardships for students, and unnecessary
administrative burden for schools.
28. Issue: Disbursement for first-time, first-year borrowers. Section 428G(b)(1)
Recommendation: Permit schools to impose, at their option, 30-day delayed
disbursement for first-time, first-year borrowers.
Rationale: Evidence shows that imposing this requirement on all first-time, first-year
borrowers does little to prevent defaults. Given the hardships that some borrowers
subject to this provision have experienced, NASFAA recommends eliminating the
requirement for all schools but permitting schools to impose it as a default management
tool. First-time, first-year borrowers without access to loans during this period often are
unable to purchase books and related educational materials necessary to keep up with
their studies during their initial higher education experience. Several NASFAA
members reported that some are even forced to drop out of school as a result.
29. Issue: Overaward tolerance (Section 428G(d)(2))
Recommendation: Allow a $300 overaward tolerance in the FFEL and Direct Loan
programs.
Rationale: Given the many circumstances under which an overaward may be created,
and the fact that modest overawards are permitted in other title IV programs, NASFAA
recommends that similar treatment be permitted in the loan programs. NASFAA
believes that a $300 overaward is low enough to prevent the borrower from incurring
unreasonable excess debt, but sufficient to avert costly and inconvenient administrative
burdens for students and schools.
30. Issue: Participation in the Unsubsidized Stafford Loan Program (Section
428H(b))
Recommendation: Permit schools to choose whether their students can borrow
Unsubsidized Stafford Loans.
Rationale: Given the implications of an institution's default rate on participation in other
title IV programs (such as the Subsidized Stafford Loan and Federal Pell Grant
programs), NASFAA believes that schools need additional tools to help manage their
default rates and, as such, should be permitted to choose whether its students borrow
under the Unsubsidized Stafford Loan Program.
31. Issue: Origination fee for Subsidized and Unsubsidized Stafford FFEL and
Direct Loans (Section 428H(f), Section 438(c), and Section 455(c))
Recommendation: Eliminate the borrower origination fee.
Rationale: As students graduate with increasingly higher student loan debt, NASFAA
believes that elimination of the origination fee for all federal student loans is in the best
interests of students.
Page 22
32. Issue: Program of assistance for borrowers (Section 432(k))
Recommendation: Require the Department to implement current law.
Rationale: NASFAA believes that this section, which directs the Secretary of Education
to undertake a program to encourage corporations and other private and public
employers, including the Federal government, to assist borrowers in repaying student
loans, including providing employers with options for payroll deduction of loan payments
and offering loan repayment matching provisions as a part of employee benefit
packages, will help borrowers manage their loan payments. NASFAA believes the
program should have been implemented as a part of the 1992 Amendments.
33. Issue: Plain English disclosures by lenders (Section 433)
Recommendation: Require all disclosures mandated by this section to be in plain
English.
Rationale: NASFAA believes that plain English should be used in all communications
with students and borrowers.
34. Issue: Default rate exemption for certain institutions (Section 435(a)(2)(C))
Recommendation: Extend through the next reauthorization period the current default
rate exemption for Historically Black colleges and universities, tribally controlled
community colleges, and Navajo Community Colleges, but require the use of a default
management plan as an aid for these institutions with high default rates.
Rationale: Given the needy populations these institutions traditionally serve, NASFAA
recommends continuing these exemptions, but believes the use of default management
plans at these schools can minimize student loan defaults.
35. Issue: Prohibiting use of certain incentives (Section 435(d)(5))
Recommendation: Retain language, adding new provisions for Inspector General report
and follow-up action.
Rationale: NASFAA questions the enforcement of this section which prohibits several
incentives by eligible lenders. NASFAA recommends adding language to require a
Department of Education Inspector General report in this area, with follow-up law
enforcement action as necessary to clean up reported problems areas.
36. Issue: Income Contingent Repayment option in the FFEL Program (Section
437A(b))
Recommendation: Require the Secretary to publish the results of the required finding in
this section, and, if Income Contingent Repayment continues to be available to
borrowers in the Direct Loan program, require the Secretary, after consultation with
schools, lenders and guaranty agencies, to develop and implement an Income
Contingent Repayment option within 360 days of enactment of the reauthorization
legislation.
Rationale: NASFAA believes that the Secretary (pursuant to Section 437A) should have
published a finding that examines issues surrounding Income Contingent Repayment in
the FFEL program. NASFAA also believes that if both the FFEL and Direct Loan
Programs continue, the terms and conditions of the programs should be the same.
Page 23
End of previously approved recommendations for this section of the law. New
recommendations follow.
Federal Work-Study Program
21. FWS community service (Section 443(b)(2), (8)(B), 442(e))
Recommendation: Eliminate 5 percent community service requirement. For those
institutions which allocated at least ten percent of their FWS funding for community
service activities as defined in Section 441(c), then 100 percent of reallocated funds
available under Section 442(e) would be returned to that group of schools meeting this
standard.
Rationale: The Task Force suggests modification of the community service provision by
eliminating the mandatory 5 percent community service requirement. It urges
postsecondary institutions utilize FWS for community service activities, but takes a
carrot approach to community service. The Task Force recognizes that many colleges
have difficulty reaching the 5 percent requirement. Some of the factors that create
these difficulties include the rural location of the institution; an abundance of
postsecondary institutions within a small geographic area competing for these volunteer
positions; well-establish campus and community service programs that lock up
available community service jobs; a paucity of community service jobs; and, an ethic
within the community service community against paid work for "volunteer" activities.
The Task Force supports and encourages the use of FWS funds for community service,
but believes the program and goals of community service are better served by
rewarding those community service schools that participate above ten percent use of
funds by dividing reallocated funds to those schools rather than the stick of punishment.
The Task Force notes the January 10, 1997 letter sent to college presidents by the
higher education community urging the increase in voluntary community service.
22. Bonus FWS allocation (Section 442(a)(4))
Recommendation: Eliminate this section which provides when FWS appropriations are
above $700 million, then 10 percent of such excess goes to schools where 50 percent
or more of its Federal Pell Grant recipients graduate or transfer to a four-year institution.
Rationale: The Task Force believes, however laudable a goal, that this provision of the
law only accomplishes what schools and students should be doing anyway. Records
needed for such a determination are not collected currently. The Task Force also
suggests that all postsecondary FWS eligible institutions need FWS funding and a
special interest earmarking of funds as this section is not in the best interests of the
program.
23. FWS reallocation timing (Section 442(e))
Recommendation: Allow reallocated FWS funds, if necessary, to be used in subsequent
award year.
Rationale: The Task Force understands the concern that reallocated FWS funds may
come too late in the cycle to use effectively. The Task Force recommends a possible
solution that such funds be used in a subsequent award year. If there is a reallocation
Page 24
timing problem, then this would allow for more effective management of FWS funds and
student employment. If the membership believes the reallocation process currently
works well, then the Task Force would not forward this recommendation to the NASFAA
Board of Directors.
24. Campus FWS match and community service match waiver (Section 443(b)(5)
and new section)
Recommendations: a) Retain current level of campus FWS match.
b) Allow institutions to waive match for off-campus community service.
Rationale: The Task Force believes that the current 25 percent FWS match by schools
is an appropriate commitment of funds matching those from the federal government.
Many schools indicate they would have either a difficult time meeting a higher match
percentage or would not be able to provide an increased match and would, in that case,
forego increased FWS funding.
The Task Force recommends that schools have the authority to waive the match
required by off-campus agencies that provide community service opportunities for FWS
students. Many times such agencies are willing to provide community service
opportunities, but are financially unable to provide the required match. In such cases,
the school would have the authority to waive the match for such an agency so that FWS
students may serve their communities in such community service work opportunities.
This waiver recommendation parallels the administrative action taken by the
Department in its America Reads initiative, but is broader in its application to a greater
number of community service providers.
25. Level of carry forward/carry back authority (Section 445(a))
Recommendations: a) Increase the level of carry forward/carry back authority to 15
percent.
b) Retain Section 442(e)(2) regarding loss of funds returned if over 10 percent.
Rationale: The administrative flexibility provided by carry forward/carry back authority in
the law are important management tools for financial aid administrators. The Task
Force recommends an increase from 10 percent to 15 percent in the carry forward/carry
back authority. This modest increase would be the first since 1980. At the same time,
the Task Force would not change Section 442(e)(2) which provides that schools that
return more than 10 percent of its allocation would see its next year's allocation reduced
by that amount unless the Secretary provided a waiver of this provision. An increase to
15 percent, combined with the Task Force's recommendation for Section 488 that
restores full transferability among the campus-based programs, would give schools
sufficient administrative flexibility and, at the same time, preserve the integrity of the
programs.
FWS Recommendations already approved by NASFAA Board of
Directors and transmitted to the Congress
Numbers 37-41 as follows:
37. Issue: Community services (Section 441(c)(3))
Page 25
Recommendation: Specify that eligible community services include support services to
students with disabilities at the institution.
Rationale: NASFAA suggests this language to give schools the specific authorization to
serve such students and believes it would positively redirect the Department's
interpretations. NASFAA is currently examining a broader definition of community
service that may include other on- and off-campus activities.
38. Issue: Contents of agreements (Section 443(b)(3))
Recommendation: Eliminate percentage references to less than full-time or
independent students.
Rationale: NASFAA concludes FWS funds must be available to these students if they
are considered in the allocation data provided to the Secretary as required in current
law. The required monitoring, however, increases administrative burden with little
advantage to the intended beneficiaries
39. Issue: Contents of agreements (Section 443(b)(6))
Recommendation: Delete requirement to make FWS-equivalent institutional
employment reasonably available to all students desiring such employment to the
extent of available funds. Rationale: NASFAA suggests it is inappropriate to mandate
requirements for non-FWS employment.
40. Issue: Contents of agreements (Section 443(b)(7))
Recommendation: Move statement that FWS employment will align with educational
programs to the maximum extent practicable to the FWS purpose section (Section
441(a)).
Rationale: NASFAA suggests this provision is best placed in the FWS purpose section.
Retaining it in the Content of Agreements paragraph does not recognize the reality of
many students who desire FWS jobs in areas other than their academic or vocational
concentrations to broaden their educational experience. Some students report they
prefer a FWS job not related to their academic or vocational major in order to gain other
valuable, but personal, experiences.
41. Issue: Private sector employment agreement (Section 443(c)(4))
Recommendation: Specify that such jobs be academically relevant to the maximum
extent practicable.
Rationale: This provision does not recognize that many students desire FWS jobs in
areas other than their academic or vocational concentrations to broaden their
educational experience. Some students report they prefer a FWS job not related to their
academic or vocational major in order to gain other valuable, but personal, experiences.
Federal Direct Loan Program Recommendations already approved by
NASFAA Board of Directors and transmitted to the Congress
Page 26
Numbers 42-44 as follows:
42. Issue: Direct Loan Program origination fee (Section 452(b))5
Recommendation: Retain fee for origination services.
Rationale: For schools originating loans, the program average fee of $10 per borrower
should be retained to reimburse institutions for the start-up and on-going costs of
administering the Federal Direct Loan Program on their campus. Such cost
reimbursements are legitimate school expenses incurred in the same fashion as those
of lenders and guaranty agencies in the FFEL Program.
43. Issue: Direct Loan origination fee to students (Section 455(c))
Recommendation: Eliminate origination fee.
Rationale: NASFAA recommends eliminating the origination fee for the Direct Loan
Program mirroring a similar recommendation for the FFEL Program. NASFAA firmly
suggests that the origination fee was intended to be temporary when it was imposed on
student borrowers in the early 1980s, and it has endured far too long to the detriment of
student borrowers. While a federal budget convenience, NASFAA suggests the
origination fee in both programs is a major inconvenience for student borrowers.
Elimination of the fee also would streamline loan program operations since tracking and
shuffling of funds no longer would be necessary.
44. Issue: Update of Section 457 (Section 457)
Recommendation: Eliminate outdated provisions of this section; update, but retain,
requirement for negotiated rulemaking.
Rationale: NASFAA recommends eliminating several provisions in Section 457 that
deal with regulatory transition issues. NASFAA recommends continuation of negotiated
rulemaking procedures for changes made by this reauthorization of the HEA.
End of previously approved recommendations for this section of the law. New
recommendations follow.
Federal Perkins Loan Program
26. Federal Perkins Loan Program cohort default rate (Section 462(h))
Recommendations: a) Replace the current Federal Perkins loan cohort default rate
calculation with cumulative default rate calculation (e.g. total dollar volume of loans in
default compared to total dollar volume of loans in repayment)
b) Specify that a loan that is rehabilitated, fully repaid, or made current after default
shall not be considered in default for purposes of calculating a school's Perkins default
rate.
c) Exempt any school with fewer than 100 Perkins borrowers from participation in a
default management plan.
Rationale: The Task Force recommends a Federal Perkins Loan Program change from
a cohort default rate to a cumulative default rate calculation. This recommendation is
made because the Task Force believes a cumulative default rate is a more accurate
and fair default indicator than the current treatment. By comparing loan volume in
Page 27
default to total loan volume, problems with a cohort default rate such as a large number
of students with small loan balances who default results in an inaccurate picture of
defaults at a school. Such a school may have only an inconsequential loan volume in
default compared to total loan volume in repayment. Yet, in this case, a cohort default
rate would be an inaccurate indicator of problems. Finally, the Task Force makes the
above recommendation, not only for the reasons stated, but also because the
fundamental nature of the Federal Perkins Loan Program is that schools have more
control over loan collections than is the case for the FFEL Program.
The Task Force proposes that once a Federal Perkins Loan is rehabilitated, fully repaid,
or made current after default that it should not be considered in default for purposes of
calculating a school's Perkins default rate. It is simple justice that with successful
efforts to bring a defaulted loan out of that status, schools should not be assessed a
possible punishment.
Schools with fewer than 100 Federal Perkins Loan Program borrowers should not have
to carry out a default management plan. This de minimis standard would allow schools
with few Federal Perkins Loans to avoid a prescribed Department default management
plan while it makes it own efforts to reduce defaults.
27. Federal Perkins Loan Program campus matching requirement (Section
463(a)(2)(B))
Recommendation: Retain current institutional match requirement and level for Federal
Perkins Loans.
Rationale: The Task Force believes the current federal/school partnership as exhibited
by the campus Federal Perkins Loan Program match is appropriate and should
continue unchanged.
28. Federal Perkins Loan Program interest rate (Section 464(c)(1)(D))
Recommendation: Continue current interest rate level for the Perkins Loan Program.
Rationale: The Task Force believes the packaging policies of Federal Perkins Loan
Program participants is targeted on the most deserving Title IV eligible students. The
Federal Perkins Loan Program serves many economically disadvantaged students
enabling such borrowers to finance their educations at lower interest rates. The Task
Force recommends continuation of this policy.
29. Federal Perkins Loan Program deferment requests (Section 463(c)(2))
Recommendation: Allow schools to automatically provide student borrowers an
in-school deferment in the case of individuals returning to their studies.
Rationale: Schools would have the ability to initiate an in-school deferment rather than
continue for students the sometimes confusing current process. Under the Task Force
proposal, schools could automatically initiate an in-school deferment for the student.
The student would get a notice and could, if he or she chose to do SO, continue to make
loan payments.
Page 28
30. Wage garnishment (New Section)
Recommendation: Allow for wage garnishment of Federal Perkins Loans; coordinate
such wage garnishment with FFELP
Rationale: The Task Force believes wage garnishment authority would be a useful tool
in the collection of especially difficult defaulted Federal Perkins Loans and such
authority should be granted to postsecondary institutions. The Task Force also
recommends coordination of wage garnishment for Federal Perkins Loans in the case
of the simultaneous application of wage garnishment to both the Federal Perkins Loan
and FFEL Programs.
Federal Perkins Loan Program recommendations already approved by
NASFAA Board of Directors and transmitted to the Congress
Number 45 as follows:
45. Issue: Contents of agreements (Section 463(a)(9))
Recommendation: Require only that schools make loans to students with demonstrated
need.
Rationale: The current law requirement (and Department of Education interpretation)
that schools award Perkins Loans first to students with exceptional need creates
numerous processing difficulties (for example, funding students who have not met
priority deadlines), and may not always be in the best interests of students. NASFAA
believes that schools know best how to award Perkins Loans within those students that
demonstrate need. For example, the current law requirement sometime forces
students into borrowing from two federal loan programs, when it may be in their best
interest to borrow under only one loan program.
End of previously approved recommendations for this section of the law. New
recommendations follow.
Parts G (General Provisions) and H (Program Integrity)
31. Regulatory relief/Multiple performance standards (New Section)
Recommendation: Change the HEA so that in determining the level of regulatory
oversight of postsecondary institutions the Secretary must use multiple performance
standards that are developed through the negotiated rulemaking process.
Rationale: A "one size fits all" regulatory approach does not serve the interests of either
the government or postsecondary institutions. For many years, and throughout the
NASFAA reauthorization process, student financial aid professionals have urged that
the micromanagement of their offices end and that substantial regulatory relief be
implemented. The Task Force agrees and recommends an open-ended process which
it believes meets that goal. The Task Force suggests a process where the Secretary
develops a multiple performance standard structure and specific regulatory relief
measures. The Secretary, then, negotiates the performance based/multiple standards
with the higher education community over what would best meet the goal of regulatory
relief and of targeted regulations determining the performance of schools administering
Page 29
the Title IV programs. See negotiated rulemaking recommendation #50.
33. 85/15 rule (Section 481(b)(6))
Recommendations. Repeal the 85/15 rule.
Rationale: The Task Force believes the 85/15 rule was well-intentioned, but needlessly
micromanages Title IV programs and unfairly burdens one segment of Title IV eligible
schools. Enforcement of the 85/15 rule produces a cumbersome, expensive
record-keeping and audit process with little result except for the denial of educational
opportunities for those low-income, career track individuals served by proprietary
postsecondary institutions. Whether one agrees with or does not agree with action by
the Congress to eliminate schools with high default rates, we do know that policy has
canceled loan eligibility for several hundred schools since the policy was first
implemented. NASFAA does acknowledge many of those schools eliminated did not
have adequate educational programs serving students. We also know a number of
quality schools lost loan eligibility for their students because those schools took risks in
admitting students from low-income families or who were inadequately served by
primary and secondary local school systems and needed career opportunities in order
to gain the education necessary to be productive citizens. The 85/15 rule should be
eliminated since it is poor educational policy if the Congress is committed to
educational opportunity. The 85/15 rule should be eliminated since other federal, state,
and local enforcement activities can root out poor performance without the arbitrariness
of this provision of the HEA.
34. Institutional eligibility (Section 481(a)(3)(C)
Recommendation: Remove the tie to HEA institutional eligibility regarding the
percentage of incarcerated students enrolled at a postsecondary institution.
Rationale: This section of the HEA makes ineligible any postsecondary institution that
has more than 25 percent of its enrollment made up of incarcerated students. The
Task Force's change would retain the prohibition for determining program eligibility, but
not for determining institutional eligibility. When the Congress eliminated Title IV
eligibility for incarcerated individuals serving time in federal and state penal institutions,
it did not address this issue. Consequently, while inmates are Title IV ineligible, if a
school wished to develop a program for prisoners, the school faced loss of eligibility if
its inmate enrollment was over 25 percent. The Task Force believes schools and the
majority balance of their student bodies should not lose eligibility if it wishes to serve an
incarcerated population over 25 percent of enrollment. Since inmates are ineligible for
Title IV funds, the federal government has no interest in this matter and, therefore,
preserving the requirement in the program eligibility section of the Act would meet any
possible congressional concerns and not unfairly punish students or schools.
35. Exit/entrance counseling (Section 485(a)(1)(M) & 485(b)
Recommendations: a) Require schools to arrange appropriate loan counseling which
may include use of new technologies such as the Internet or other technological
innovations.
b) Prohibit the Department from regulating what is considered appropriate counseling
activities or content, but such may be subject to examination in a program review if
problems emerge. Rationale: The Task Force believes it is important that student
Page 30
borrowers are fully informed about any loan they may assume such as its terms and
conditions and the borrower's rights and responsibilities. The Task Force, however,
believes the HEA micromanages the content and the delivery of such information that
schools provide and that the law should be changed. In the view of the Task Force,
schools are more familiar with their diverse student population and are in the best
position to know what information borrowers need to know; when to provide such
information; and how such information can be most effectively conveyed. If this
recommendation is approved by the Congress, then each school must provide
appropriate loan counseling without regulation from the Department. The
recommendation envisions that schools would be able to provide such information as
appropriate to its content, context, timing, and delivery. Innovations such as the World
Wide Web, E-mail, or other advanced technologies may be used. However, the school
would be subject to examination in a program review if problems emerged in its
counseling activities.
36. Electronic reporting of audits (New Section)
Recommendation. Require electronic reporting of audits to the Secretary in a
standardized format.
Rationale: The Task Force believes this requirement is administratively reasonable from
a gatekeeping and program integrity viewpoint.
37. Student access to NSLDS personal data (Section 485B)
Recommendation: Allow students to have access to NSLDS personal data.
Rationale: The Task Force recommends this student consumer provision so that
students may check the accuracy of their own data in the NSLDS and to inform
themselves of other information they might need, such as, who or what is the address
of the holders of their loans.
38. Issue: School access to institutional eligibility information (New section)
Recommendation. Allow schools on-line access to their institutional eligibility data.
Rationale: The Task Force believes schools should have on-line access to the
information provided to the Department used to determine institutional eligibility for
purposes of determining its accuracy.
39. Master promissory note (New section)
Recommendation. Within one year of enactment the Secretary shall develop and make
available for use a "master promissory note." This would apply to the FFEL and DL
Programs.
Rationale: The Task Force recommends the Secretary, cooperating with the lending
community and schools, create a master promissory note which would bring efficiencies
and simplicity to the process of receiving loans. Students easily could access loan
funds and better manage their cash flow and debt load. This line-of-credit concept
would need to be implemented within one year of the date of enactment of the law.
The development of such a master promissory note would be subject to negotiated
rulemaking to work out the operational and technical details.
Page 31
40. Office of Student Loan Ombudsman (New Section)
Recommendation: Create within the Department an Office of Student Loan
Ombudsman.
Rationale: The Task Force suggests a HEA amendment creating an Office of Student
Loan Ombudsman within the Department for resolving student loan complaints.
Ombudsman offices are not unfamiliar on college campuses and the Task Force
believes such a Department office would be of great benefit for students who have
found difficulties with their loans and, thereby, reduce defaults or delinquencies. Such
an office also may reduce campus inquiries from students with problem loans.
41. Transfer of allotments (Section 488)
Recommendation: Allow schools to transfer no greater than 25 percent among
campus-based programs
Rationale: The Task Force believes postsecondary institutions should have authority to
transfer up to 25 percent of funds in one campus-based program to another, rather than
the more limited transfer ability in current law. The effect of the Task Force
recommendation would go back to the law as it was in effect prior to the 1992 HEA
Amendments. The Task Force believes this is a common sense change that allows
limited, but important, administrative flexibility allowing schools to make decisions
according to institutional and student needs.
42. Master calendar (Section 482)
Recommendations: a) Modify master calendar so that by December 1st the
Department is required to have all written guidelines, policy interpretations, handbooks,
or other materials available to schools. If such materials were not available by
December 1st, then schools would be held harmless for their good faith efforts to
implement new or newly revised/interpreted regulations.
b) Change HEA so that statute urges Department training activities be conducted in an
expeditious manner.
c) Require as part of the Master calendar, the Secretary, by December 1st, notify
schools of minimal hardware and software requirements necessary in the following
award year.
Rationale: Responding to numerous complaints by financial aid administrators, the
Task Force makes this recommendation. Its purpose is to require the Department to
deliver to financial aid administrators the tools they need to administer the programs in
a timely manner. Such materials would include verification manuals, etc. If the
Department did not do so, schools would be held harmless for their good faith efforts to
implement regulations without timely guidance provided late by the Department.
Further, the Task Force would provide statutory guidance to the Department that its
training activities be conducted in a timely manner.
The Task Force recommends, as part of the Master Calendar, that schools have
enough notice and lead time from the Department to purchase or install electronic
hardware and software which is necessary to administer the Title IV programs in the
upcoming award year.
Page 32
43. Legal immigrant Title IV eligibility (Section 484(a)(5))
Recommendation: Retain legal immigrant Title IV eligibility. Oppose efforts to mandate
such recipients obtain loan cosigners or have income deemed from sponsors.
Rationale: The Task Force recommends continuing Title IV eligibility for legal
immigrants without any requirements for co-signers for Title IV loans or deeming of
sponsors income. While the 104th Congress debated proposals to eliminate Title IV
eligibility, impose deeming and/or require loan cosigners, in the end, the Congress
decided to make no change in the treatment of legal immigrants for Title IV funding or
eligibility. The Task Force recommends continuing this policy to benefit legal
immigrants by providing educational opportunities to succeed in their newly adopted
homeland. To implement any of the above policies would diminish the American dream
and greatly reduce the opportunity for economic mobility for those who legally came to
this nation seeking a better life for themselves and their families.
44. Student eligibility (Section 484(d))
Recommendation: Retain eligibility requirement that individuals have a high school
diploma or a recognized equivalent or prove ability-to-benefit in order to be eligible for
Title IV assistance. (See also next recommendation)
Rationale: Some have proposed that a high school diploma be a singular standard for
Title IV eligibility rather than the current eligibility criteria of high school diploma, its
recognized equivalent, or by meeting ability-to-benefit (ATB) criteria. Most often that
recognized equivalent attained by individuals is the GED. The Task Force concluded
current law should not be changed in this eligibility matter. It notes evidence that many
individuals with GEDs or those admitted under ATB academically outperform recipients
of high school diplomas. The Task Force believes eliminating current law's allowance
for student eligibility by successfully completing the multi-hour GED exams or gaining
eligibility by proving ability-to-benefit and requiring only a high school diploma would
deny educational opportunities to that segment of our society most in need of the
chance to improve their academic and career skills.
45. Treatment of Ability to Benefit (ATB) (Section 484(d) and Section 481(3)(D))
Recommendations: a) Permit an eligible institution admitting fewer than 25 percent of
its enrollment as ATB students to use its own assessment methods and methodology.
b) Remove the 50 percent institutional cap on ATB students.
Rationale: The last revision of ATB resulted in a micromangement by the Congress of
this requirement. The Task Force is considering a recommendation providing for
appropriate institutional flexibility and, at the same time, preserving congressional intent
that ATB is not misused. The Task Force suggests that schools, using their own
assessment methods and methodologies, can better appraise an individual's chance for
successfully completing that school's program of study. The 25 percent ceiling would
allow those schools admitting ATB students below that level to utilize complex and
more focused assessment tools, than the current ATB testing required under law. The
Task Force would recommend that above the 25 percent ATB enrollment level schools
must follow current law in this area. The Task Force placed this ceiling recognizing that
there is some potential for abuse, but with at least 75 percent of a school's enrollment
consisting of non-ATB students that potential is significantly reduced or eliminated.
Page 33
With still unanswered questions the Task Force asks the membership whether or not
this recommendation should be submitted to the Congress.
If the Task Force does recommend the above ATB approach, the Task Force endorses
striking Section 481(3)(D) which limits schools to no more than 50 percent of ATB
enrollment unless the two-year or four-year postsecondary institution offers associate's
or bachelor's degrees. This discriminatory HEA requirement only serves to limit
educational opportunities for students most in need of the educational services offered
by schools. With effective ATB testing in place and with statutory cohort default rates
that schools fear will eliminate their eligibility to participate in the loan programs,
schools will carefully examine their educational missions and admissions policies so as
to not lose their eligibility and, therefore, the 50 percent ATB enrollment cap is
unnecessary and discriminatory.
46. FWS I-9 employment eligibility verification (New section)
Recommendation: End duplicative I-9 employment eligibility verification.
Rationale: The Task Force observes that the current practice for FWS I-9 employment
eligibility verification which is a duplication of effort to collect copies of social security
cards, alien registration cards, citizenship documents, or passports when citizenship,
social security and INS matches are performed in the application process. The Task
Force recommends that the law should be changed so that the individual only submits
an I-9 and the picture identification card each college issues.
47. Study abroad (Section 484(o) and Section 487(a)(13))
Recommendations: a) Clarify that the home institution is required to process the aid for
an otherwise eligible student involved in a study abroad program.
b) Continue student Title IV eligibility for study abroad programs that are academically
sound, but such study abroad programs would need to be approved by the home
campus.
Rationale: Sometimes host institutions find the student's home institution has refused to
process financial aid for one of their otherwise eligible students who is involved in a
host institution's study abroad program. While the aid may be provided based on a
consortium agreement with the home institution, the Task Force believes it is the
responsibility of the home institution to process the aid. The law requires that aid be
processed for the student, but does not specify who should do so. The result is that
students are often caught in the middle between a home and host institution, neither of
which want to process their aid. The Task Force recommendation would clarify the
responsibilities in cases such as these.
The Task Force believes Title IV eligible students should have the same opportunities
for study abroad as those who are more economically advantaged and, therefore, urges
continuation of statutory language in this area. The Task Force notes, however, there
are increasing pressures on financial aid offices in this area. Occasionally, aid
professionals are asked to approve student Title IV funding for overseas programs
whose academic soundness is open to question and interpretation. By clarifying that
the home campus must approve a study aboard program in order for a student to use
Page 34
Title IV funds to participate in such a program a measure of quality review would be
injected in the process.
48. Experimental sites and Quality Assurance Program (QAP) (Section 487A)
Recommendations: a) Retain the authority for voluntary innovative management
initiatives through experimental sites.
b) Clarify experimental sites authority applies to all postsecondary institutions.
c) Ensure that experiments may be more broadly focused.
d) Finally, the Task Force recommends that QAP participation is voluntary.
Rationale: The Task Force believes both the experimental sites and QAP authorized in
Section 487A are valuable programs. The Task Force adds legislative language to
ensure that participation in each program is voluntary and that diversity among
postsecondary institutions selected is a priority of the Secretary. The Task Force
recommends that continued experimentation be broadly focused and not limited to
verification, among any other limitations.
49. Advisory Committee (Section 491)
Recommendation: Modify HEA adding legislative language mandating the membership
of the Advisory Committee include "a broad and representative range of institutions."
Rationale: The Task Force proposes adding language to ensure the membership of the
Advisory Committee comes from a broad and representative range of institutions to
ensure a diversity of experience and opinion to inform the discussions of that group.
50. Negotiated rulemaking (Section 492)
Recommendation: Strengthen the negotiated rulemaking process so that decisions are
more binding and more closely parallel the process followed by other federal agencies.
Rationale: The Task Force believes the negotiated rulemaking process that followed
the 1992 HEA reauthorization, while flawed, was a valuable exercise which led to better
focused, more tightly written regulations. The Task Force recommendations would
improve the process by making Department/higher education community negotiated
rulemaking parallel procedures practiced by other government agencies and produce a
more compulsory decision-making procedure.
51. Hardware/Software minimal requirements (New section)
Recommendation: Require the Secretary to prescribe minimum computer and other
electronic capacity, including software requirements, to be met by all participants.
Rationale: The Task Force is very cognizant of the micromanagement of financial aid
offices evident in past reauthorizations. Yet, the Task Force believes its
recommendation that the Secretary shall prescribe minimal computer and other
electronic capacity to be met by all participants is appropriate in this limited
circumstance. The Task Force suggests each Title IV eligible institution have
mandated by the Secretary minimal hardware and software requirements so that a
school and its students may benefit from such efficiencies of communication and
processing of information.
52. Proprietary School eligibility (Several sections in the Act)
Page 35
Recommendation: Continue HEA provision so that students attending proprietary
schools may retain Title IV eligibility under the same terms as all eligible students.
Rationale: Under the principles adopted by the Task Force, students attending
proprietary schools should continue to be Title IV eligible without any further separate
requirements on such applicants or the Title IV eligible schools they attend. Attempts to
shift such students into other proposed, but not enacted legislative proposals,
sometimes do not recognize the necessity to educate all Americans for those
educational or career goals that each person may attain given their talents and desires
for a productive life contributing to the economic well-being of all of this nation's
citizens.
53. Project EASI (New Section)
Recommendation: Statutorily encourage progress on Project EASI
Rationale: The Task Force by statute would encourage progress on Project EASI. It
holds much promise for simplifying the student aid process by use of new technologies
and streamlined administrative procedures.
54. HEA implementation dates
Recommendation: The Task Force urges Congress, when writing this reauthorization
bill, to be cognizant that campuses need time to implement any changes in the Act.
Rationale: While budget considerations may be important in this reauthorization of the
HEA, the Task Force urges the Congress when writing implementation dates for various
HEA provisions to be cognizant that campuses need time to implement any changes in
the Act. The 1992 Amendments contained "date of enactment" or quickly implemented
provisions that were impossible for the Department of Education to inform schools of,
not to mention, the impossibility of schools implementing those provisions. The Task
Force urges the Congress in this reauthorization not to force schools into impossible
implementation dates. Such impossible implementation dates result in confusion,
misplaced efforts, and inadvertent violations of the HEA as revised.
Part G and H recommendations already approved by NASFAA Board
of Directors and transmitted to the Congress
Numbers 46-56 as follows:
46. Issue: Secretary required to comply with schedule (Section 482(a)(1))
Recommendation: Add a time line by which the Department (or its contractor) must
provide paper applications and output (paper and electronic) to schools.
Rationale: In consultation with appropriate experts, NASFAA will develop such a time
line for provision of paper applications and output to schools. This recommendation will
enable schools to better serve students and schools through timely receipt of
applications and paper (or electronic) output.
47. Issue: Secretary required to comply with schedule (Section 482(a)(2))
Recommendation: Specify the FISAP filing date as October 1 to prevent the
Page 36
Department from making the date too early.
Rationale: NASFAA recommendation would prevent the Department from setting too
early a date for completion of FISAPs and would allow schools adequate time to
complete such a form.
48. Issue: Notice to Congress (Section 482(d))
Recommendation. Update committee names and require the Secretary to also notify
representatives of the postsecondary education community when the Master Calendar
dates have not been met.
Rationale: The updating portion of this recommendation is a technical conforming
change in legislative language. The second part would give representatives of the
higher education community the same notification that Congress receives to be better
informed in this area.
49. Issue: FAFSA preparation (Section 483(e))
Recommendation: Apply provision only to those paid by applicant.
Rationale: NASFAA recommends that only those paid by an applicant to prepare a
FAFSA should provide the required information. This requirement would not apply to
financial aid administrators, unless such individual was working in a private capacity
and received compensation for the preparation of a FAFSA.
50. Issue: Toll-free information (Section 483(d))
Recommendation: Retain the toll-free information line.
Rationale: NASFAA believes the toll-free number is a useful aid and should be retained
to continue providing services for students.
51. Issue: General student eligibility (Section 484(a))
Recommendation: Add "federal" before grant, loan, and work assistance.
Rationale: This change makes it clear that the eligibility requirements apply only to
federal grant, loan, and work assistance.
52. Issue: Required student document (Section 484(a)(4))
Recommendation: Eliminate student requirement to file the statement of educational
purpose and Social Security Number (SSN) with institution.
Rationale: A separate filing of a statement of educational purpose and SSN with a
school is no longer necessary since these items are on the FAFSA.
53. Issue: Data base matching (Section 484(n))
Recommendation: Delete requirement for the Secretary to conduct data base matches.
Rationale: NASFAA recommends eliminating the provisions related to Selective Service
registration from the Higher Education Act, although the actual registration requirement
is in statute outside the Higher Education Act. If the government believes that Selective
Service registration is useful, then it should use means other than the Title IV programs
to force compliance. NASFAA recommends that compliance can be attained in more
cost effective ways than through use of the Title IV programs. NASFAA recommend
retaining Sec. 484(n), however, if the Congress did not repeal the Solomon amendment
Page 37
requiring Selective Service registration.
54. Issue: Information dissemination activities (Section 485(a))
Recommendation: Revise this section to better reflect changes in postsecondary
education, including the following items.
providing consumer information to prospective students upon their request;
making such information widely available by electronic means;
defining prospective student as one who has submitted an admissions application;
moving deferment and cancellation information provisions to Section 485(b); and,
making technical and conforming changes in the graduation/completion, athletic
subparagraphs as well as elsewhere in the section.
Rationale: NASFAA recommends updating this section to better reflect changes in
technology and the realities of campus information-sharing. NASFAA believes students
must be adequately informed of student financial aid procedures and policies and must
understand their rights and responsibilities. NASFAA recommends a substantial rewrite
of this section so that consumer information is provided to students in a more cost
effective and streamlined fashion. The current statutory requirements are too
prescriptive and forces unneccesary costs on schools who can provide such information
to Title IV recipients in more effective and efficient ways than the "one size fits all"
approach in the current HEA.
NASFAA recommends making other technical and conforming changes to Section
485(b).
55. Issue: Program Participation Agreement provision of state grant assistance
(Section 487(a)(9))
Recommendation: Delete provision and develop alternative legislative language to
accomplish purpose.
Rationale: Providing information on the availability and eligibility of students for state
grant assistance is the responsibility of state entities. Schools attempting to assemble
such information find it so general as to be of little use and, more commonly, refer
students to relevant agencies. NASFAA recommends developing alternative and more
effective means of carrying out the purpose of this section that would serve students
more effectively and efficiently through direct contact with appropriate state agencies
without burdening schools with this requirement.
56. Issue: Regional meetings (Section 492(a))
Recommendation: Revise this section to encourage the Department's use of small
groups of financial aid professionals to resolve problems and provide advice in the
development of the Department's policy.
Rationale: The current law is outdated and needs to be revised. NASFAA believes the
Department's current practice of involving small groups of financial aid professionals to
study issues and initiatives is a sound practice and should be encouraged and
mandated by law.
End of previously approved recommendations for this section of the law.
JUL-25-1997 15:55 TO:ROBERT SHIREMAN
FROM: DADE, J.
P.1/7
URGENT
Total Pages: 7
LRM ID: CJB83
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
Washington, D.C. 20503-0001
Friday, July 25, 1997
LEGISLATIVE REFERRAL MEMORANDUM
TO:
FROM:
part Janet Legislative R. Forsgren Liaison (for) Officer Assistant See Distribution Director for below
Legislative Reference
OMB CONTACT:
Constance J. Bowers
PHONE: (202)395-3803 FAX: (202)395-6148
SUBJECT:
EDUCATION Draft Bill on Higher Education Act Reauthorization - (New) Title
V. Part C . Urban Partnership Program
DEADLINE:
5:00 p.m. Tuesday, July 29, 1997
In accordance with OMB Circular A-19, OMB requests the views of your agency on the above
subject before advising on its relationship to the program of the President. Please advise US if this
item will affect direct spending or receipts for purposes of the "Pay-As-You-Go" provisions of Title
XIII of the Omnibus Budget Reconciliation Act of 1990.
COMMENTS: The attached is part of ED's proposed reauthorization of the Higher Education Act,
which will be reviewed, cleared and submitted informally to Committees in separate parts. ED will
consolidate the entire bill for formal transmittal later.
DISTRIBUTION LIST
AGENCIES:
EOP:
Timothy A. Rosado
Kathryn B. Stack
S. A. Noe
Patricia A. Smith
Barry White
Robert M. Shireman
Jonathan H. Schnur
Michael Cohen
William R. Kincaid
Daniel J. Chenok
Edward M. Rea
Janet R. Forsgren
JUL-25-1997 15:55 TO:ROBERT SHIREMAN
FROM: DADE, J.
P. 2/7
LRM ID: CJB83
SUBJECT: EDUCATION Draft Bill on Higher Education Act Reauthorization
(New) Title V, Part C - Urban Partnership Program
RESPONSE TO
LEGISLATIVE REFERRAL
MEMORANDUM
If your response to this request for views Is short (e.g., doncur/no comment), we prefer that you respond by
e-mail or by faxing US this response sheet. If the response is short and you prefer to call, please call the
branch-wide line shown below (NOT the analyst's line) 10 leave a message with 8 legislative)assistant.
You may also respond by:
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(2) sending us 8 memo or letter
Please include the LRM number shown above, and the subject shown below.
TO:
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Office of Management and Budget
Branch-Wide Line (to reach legislative assistant): 395-7362
FROM:
(Date)
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(Agency)
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The following Is the reponse of our agency to your request for views on the above-captioned subject:
Concur
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See proposed edits on pages
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FAX RETURN of
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JUL-25-1997 15:55 TO:POBERT SHIREMAN
FROM:DADE, J.
P. 3/7
Title V - Urban Partnerships Program
DRAFT 7/25/97
"PART C URBAN SCHOOL, COLLEGE AND UNIVERSITY PARTNERSHIPS
"FINDINGS; PURPOSE; PROGRAM AUTHORIZED
"Sec.531 FINDINGS The Congress finds that-
"(1) The Nation's urban schools are facing substantial problems and needs in such
areas as inadequate academic preparation of students and low levels of educational aspirations, low
levels of parental involvement, and other urban social problems that impinge upon the school
environment.
"(2) The Nation's urban institutions of postsecondary education have available
resources that by virtue of the institutions' close relationship with their urban communities, are
uniquely situated to help ameliorate the problems described in paragraph (1).
"(3) The skills, knowledge and experience in these urban institutions. if applied in a
systematic and sustained manner, and augmented as needed by other urban community-based
organizations, working with urban elementary and secondary schools Scan make a significant
contribution to the solution of such problems confronting these schools.
"(4) The application of such skills, knowledge and experience is hindered by the
limited funds available to redirect attention to such problems of urban education.
as
(b) PURPOSE.--It is the purpose of this part to improve the performance of urban
elementary and secondary schools with a high percentage of under-performing students by promoting
partnerships among these urban schools and school districts, institutions of higher education, and
other public and private groups in order to assist these schools to address the barriers they face in
successfully carrying out their educational mission. Institutions of higher education are encouraged
to use the full range of their institutional, faculty, and student resources, to help these urban schools
to improve their students' performance in such areas as retention and graduation rates, scores on
standardized tests of achievement in mathematics, science and reading, and the rate At which their
students enroll at institutions of postsecondary education.
"(c) PROGRAM AUTHORIZED.-(1) The Secretary is authorized to make grants to eligible
institutions on behalf of partnerships to enable them to solve problems faced by elementary and
secondary schools in urban areas which limit their educational effectiveness.
"(2) Grants under this part shall not exceed 5 years.
"(3) To the extent practicable, the Secretary shall ensure equitable geographic
distribution of grants under this part.
33
JUL-25-1997 15:55 TO:ROBERT SHIREMAN
FROM:DADE, J.
P. 4/7
"PARTNERSHIP AGREEMENT
"SEC.532. (a) AGREEMENT.-I be eligible for a grant under this part, an eligible
institution shall enter into a written partnership agreement with 8 one or more local educational
agencies in an urban area that focuses on improving urban schools and eliminating the barriers these
schools face in preparing their students for postsecondary education or careers. Such partnerships
may also include businesses, community-based organizations, civic organizations, and other public
or private organizations or agencies.
"(b) CONTENTS OF AGREEMENT- written agreement shall include.
"(1) a list of one or more urban schools that are the focus of the partnership
agreement;
"(2) a list of all partnership participants and their official representative, including the
representative for each of the urban schools;
"(3) a description of the responsibilities of each partnership participant; and
"(4) a Ust of the resources to be contributed by each partnership dicipant.
"APPLICATIONS
"SEC. 533. (a) IN GENERAL. An eligible institution desiring to receive a grant under this
part on behalf of a partnership shall submit an application to the Secretary at such time, in such form,
and providing such information as the Secretary may reasonably require.
"(b) CONTENTS -Each application shall include--
"(1) the partnership agreement described in section 532;
"(2) a needs assessment documenting, through quantifiable data, the basis for selecting
each participating urban school, and including information on student Pen comance and other
educational problems or barriers to success that the urban schools face and aat Will be targeted by
the program;
"(3) a description of the programs and activities to be developed and carried out by
the partnership; and
"(4) assurances satisfactory to the Secretary that -
"(A) the partnership will establish a governing board, including one
representative of each participant in the partnership;
"(B) federal funds will provide no more than 70 percent of the total cost of the
34
JUL-25-1997 15:55 TO:ROBERT SHIREMAN
FROM:DADE, J.
P.5/7
project in the first year, 60 percent of such costs in the second year, and 50 percent of such costs in
the third and any subsequent year,
"(C) no local educational agency or institution of higher education participating
in A partnership under this part will reduce its combined fiscal effort per student or its aggregate
expenditure on education from non-Federal resources; and
"(D) each local educational agency or Institution of higher education
participating in a partnership under this part will use funds under this part to supplement, and to the
extent practicable, increase the resources that would, in the absence of such funds, be made available
from non-Federal sources for the education of students and, in no case; to supplant non-Federal funds
that would otherwise be available.
"(c) SPECIAL RULE.-The non-federal share of grants awarded under this part may be in
cash or in kind fairly evaluated, including services, supplies or equipment.
"USE OF FUNDS
"SEC. 534.(a) IN GENERAL-(1) Funds under this part, to the extent practicable, shall be
used to assist elementary and secondary schools in urban areas that serve a high percentage of
under-performing students to eliminate the barriers these schools face in helping their students'
achieve their academic potential and prepare for and pursue a postsecondary education.
"(2) Activities described under paragraph (1) may include program design and
development, training. inproving the use of technology, sharing of resources, and other services and
activities designed to assist urban schools meet and address their educational problems.
"(3) Funds under this part may not be used for programs whose primary purpose is
to meet postsecondary education degree requirements, such as student teaching or practica.
"(b) STUDENT PARTICIPATION-Institutions of higher education are encouraged to place
students receiving funds under Title IV, Part Cin grant-supported projects.
"PEER REVIEW
"SEC. 535. The Secretary shall use a peer review process to review applications submitted
under this part and make recommendations for funding The Secretary shall ensure, to the extent
practicable, that the panel is geographically balanced and is composed of persons with expertise in
the area of urban education and the problems confronting urban schools.
"DEFINITIONS
"Sec. 535. As used in this part--
"(1) The term "urban area" means a metropolitan statistical area having a population
35
JUL-25-1997 15:55 TO:ROBERT SHIREMAN
FROM:DADE, J.
P.6/7
of not less than 350,000.
"(2) The term "eligible institution" means an institution of higher education, or a
consortium of such institutions any one of which meets all of the requirements of this paragraph,
which-
"(i) is located in an urban area;
"(ii) draws at least 50 percent of its undergraduate students from the
urban area in which such institution is located, or from contiguous areas;
"(iii) carries out programs to make postsecondary educational
opportunities more accessible to residents of such urban areas, or contiguous area;
"(iv) has a range of institutional, faculty, and other resources available
that are relevant to the needs of urban schools; and
"(v) has 8 record of service to the local community, including
partnerships with organizations the purpose of which is to address the needs and priorities of the
community.
AUTHORIZATION OF APPROPRIATIONS
"SEC. 537. There are authorized to he appropriated such sums as may be necessary for each
of fiscal year 1998 through 2002 to carry out this part.
###
36
JUL-25-1997 15:55 TO:ROBERT SHIREMAN
FROM:DADE, J.
P. 7/7
Draft 7/16/97
Urban Community Partnership Program
The existing Urban Community Service Program will be reauthorized as the Urban Community
Partnership Program. The new program will establish partnerships between urban institutions of
higher education and urban elementary and secondary schools to improve the performance of
these schools. The inclusion of additional partners such as businesses, community-based
organizations, etc. will be encouraged.
This partnership program recognizes the important role that urbán postsecondary institutions can
play in their community to improve the performance of elementary and secondary schools and help
students better prepare for postsecondary education and successful careers.
Partnerships
A written partnership agreement will be included as part of an application under this
program. This agreement will identify not only the individual partners, but the rationale for
choosing the particular urban schools with which 10 work, as well as the educational issues
the partnership will address.
Activities supported under this program
Unlike the current Urban Community Service Program, this new partnership program will
focus exclusively on addressing problems of urban education. Funds will be used to assist
urban elementary and secondary schools having a high percentage of under-performing
students to eliminate the barriers these schools face in achieving their educational mission.
Grantees will have considerable flexibility in the activities of the funded partnerships. such
as program design and development, training, improving the use of technology, sharing
resources, etc.
Cost-sharing: grant duration
Federal funds will provide no more than 70 percent of the total costs of the project in the
first year; 60 percent in the second year, and 50 percent in subsequent years. Partnerships
may be funded for up to five years.
Urban area: eligible urban institution
"Urban area" means a metropolitan statistical area having 1 population of not less than
350,000. To be eligible, institutions must be located in an urban'area, draw a significant
percentage of their students from the area, and demonstrate a clear commitment to the
community.
37
U.S. HOUSE OF REPRESENTATIVES
(202) 225-2095
CHARLES BARONE
LEGISLATIVE DIRECTOR
CONGRESSMAN GEORGE MILLER
2205 RAYBURN H.O.B.
7TH DISTRICT, CALIFORNIA
WASHINGTON, D.C. 20515
Hey Bob-
Ful
Cranlie
\
NEWS
CONGRESSMAN
ATTENTION:
miller
2205 Rayburn Building
7th District
Washington, D.C. 20515
California
(202) 225-2095
FOR IMMEDIATE RELEASE:
CONTACT: Daniel Weiss/James Snyder
Wednesday, July 23, 1997
202/225-2095
MILLER INTRODUCES BILL
TO IMPROVE TEACHER QUALITY
New legislation would deliver more highly
qualified teachers to nation's classrooms
WASHINGTON -- Responding to a growing student population, increased demand for new
teachers, and reports of poor teacher quality in many schools, Congressman George Miller (D-
Calif.) introduced legislation today to ensure a competent and qualified teacher in every public
school classroom.
"Recruiting, preparing, and supporting competent and qualified teachers is the single most
important thing we can do to ensure that all students achieve to the utmost of their abilities," said
Miller, a senior member of the House Education and the Workforce Committee.
"This legislation sends a message to parents that they have a right to know whether their children
are being instructed by qualified teachers," Miller said. "And it sends a message to all taxpayers
that Congress seeks to ensure that federal education dollars are being spent in a responsible
manner."
Teacher quality is quickly becoming one of the most widely discussed educational issues in
Congress. Miller's bill is the first legislation to be introduced that specifically addresses this issue.
"I believe Congress is ready to act and I am optimistic that we can work together to achieve the
goals set out in my legislation," Miller said. "Last week, the President announced a new policy
initiative to attract and train teachers to enter high-need schools. That is one component of my
bill and I look forward to working with the President and my colleagues on this important issue."
Last September, the National Commission on Teaching and America's Future reported that one
in four teachers in the nation's public schools are not fully qualified to teach in the content areas
in which they provide instruction. The report found that the problem is particularly severe in
(more)
Miller/Teachers, Page 2
July 23, 1997
areas with high numbers of low-income and minority children, where close to half of all teachers
did not have even a minor in their subject area.
The Miller bill closely tracks many of the policy recommendations made in the National
Commission's report.
A report that will be released later this month by the U.S. Department of Education is also
expected to show increased strains on teacher quality.
This issue of teacher qualifications has received heightened attention in California, where a state
effort to decrease classroom size has resulted in a dramatic increase in the hiring of under-
qualified teachers. According to EdSource, an independent non-partisan education information
center based in Palo Alto, California: "Class size reduction has created a critical and immediate
shortage of credentialed teachers in California."
"As a parent and as a taxpayer," Miller said, "I applaud California's effort to reduce classroom
size, but frankly I am deeply troubled by the extent to which the state has compromised standards
for teacher quality to meet this goal. My bill would give parents the right to know whether their
child is being taught by a qualified teacher, and would give schools the help they need to recruit
and train entry-level teachers."
Miller's bill would:
give all parents the right to know the qualifications of their child's teacher;
require states receiving federal education funds to set clear standards for teacher quality;
ensure accountability for federally supported teacher education;
provide financial rewards to teachers who choose to teach in high-need schools and who
pursue advanced teaching credentials; and,
establish local community partnerships to help schools recruit and retain qualified teachers.
"Teachers are among the hardest working people in our country and they certainly have one of
the most important jobs in our country. Unfortunately, our public policies have not always
reflected this reality. By coupling increased support for teachers with enhanced accountability,
this bill is a win-win for all those involved - educators, parents, taxpayers and, above all, our
nation's schoolchildren."
###
EXTENSION OF REMARKS
ON THE INTRODUCTION OF THE
TEACHING EXCELLENCE FOR ALL CHILDREN (TEACH) ACT OF 1997.
STATEMENT BY THE HONORABLE GEORGE MILLER
of California
In the House of Representatives
Wednesday, July 23, 1997
Mr. Speaker, I rise today to offer The Teaching Excellence for All Children (TEACH) Act of
1997.
This legislation addresses a long-standing concern that many of our Nation's school children are
being taught by teachers who are not qualified to teach in their subject areas. This is a disservice
to students, to parents, to the teachers themselves, and to taxpayers.
The problem, documented in several studies, will only get worse as the student population
continues to rise along with the demand for ever more new teachers.
Parents have a right to know whether their children are being instructed by qualified teachers.
And taxpayers have a right to expect Congress to do all it can to ensure that federal education
dollars are being spent in a responsible manner. I believe this legislation addresses both of those
important demands.
Under this legislation, states receiving federal education funds would set clear standards for
teacher quality. The bill also will ensure accountability for federally supported teacher education,
provide financial rewards to teachers who choose to teach in high-need schools and who pursue
advanced teaching credentials, and establish local community partnerships to help to schools to
recruit and retain qualified teachers.
Two Million Teachers Needed Over Next Nine Years
The number of elementary and secondary school students is expected to increase each successive
year between now and the year 2006, from the current level of 51.7 million to an all time high of
54.6 million.
The need for qualified teachers will increase accordingly. Between now and 2006, enrollment and
teacher retirement together will create demand for an additional 2 million teachers.
The shortage right now of qualified teachers to fill this demand is a significant barrier to students
receiving an appropriate education.
Too Many Teachers Are Not Fully Qualified To Teach In Their Subject Areas
Last September, the National Commission on Teaching and America's Future found that one-
quarter of classroom teachers were already not fully qualified to teach in their subject areas. An
even newer report - forthcoming from the Department of Education - indicates that 36% of
teachers have neither a major nor minor in their main teaching field. Both reports show that the
problem is even more serious in academic subjects such as math and science and in schools with
high numbers of low-income and minority children.
Research evidence suggests that teacher quality is probably the single most important factor
influencing student achievement. Now is the time to redouble efforts to ensure that all teachers in
our nation's public schools are properly prepared and qualified and that they also receive the
ongoing support and professional development they need to be effective educators.
A Fair Deal for Teachers
Teachers are among the hardest working people in our country and they certainly have one of the
most important jobs in our country. The vast majority of teachers deserve our wholehearted
admiration, respect, and gratitude.
Unfortunately, our public policies have not always reflected this attitude. As the Association for
Supervision and Curriculum Development recently pointed out, "teacher education, which
encompasses preservice preparation as well as ongoing professional development, has suffered a
chronic lack of funding, resources, and status in the United States, particularly as compared to
education in other professional fields."
In addition, the Teaching for America's Future report pointed out that: "Not only do U.S.
teachers teach more hours per day but they also take more work home to complete at night, on
the weekends and holidays." At the same time, the report goes on to say that "Other
industrialized countries fund their schools equally and make sure there are qualified teachers for
all of them by underwriting teacher preparation and salaries. However, teachers in the United
States must go into substantial debt to become prepared for a field that in most states pays less
than any other occupation requiring a college degree."
I think the public is willing to address these issues. Education tops the list of concerns in most
public opinion polls. But at the same time, parents and taxpayers want greater accountability to
ensure that any additional resources directed at improving teacher quality have a maximal impact
on student achievement.
By coupling support for teachers with enhanced accountability, this bill is a win-win for all those
involved - educators, parents, taxpayers and, above all, our nation's schoolchildren.
Let's Work Together
Last week, the President announced his intent to put the issue of teacher quality at the top of his
education agenda. With the issue of teacher qualifications receiving increased attention in
Washington and across the nation, I am more optimistic than ever that we can work together to
achieve the goals set out in this legislation. I look forward to working with the President and my
colleagues on this important issue.
TEACHING EXCELLENCE FOR ALL CHILDREN ACT OF 1997
Section-by-Section Summary
Representative George Miller (D-CA)
STATEMENT OF POLICY
The Congress declares it to be the policy of the United States that every
student shall have a competent and qualified teacher.
FINDINGS
The number of elementary and secondary school students is expected to
increase each successive year between now and the year 2006, at which
time total enrollment will reach 54.6 million.
The need for qualified teachers will increase accordingly. Enrollment and
teacher retirement together will create demand for an additional 2 million
teachers by the year 2006.
The lack of qualified teachers to fill this demand is a significant barrier to
students receiving an appropriate education.
Right now, one in four teachers in the nation's public schools are not fully
qualified to teach in their subject areas. Unless corrective action is taken at
local, state, and federal level, the additional demand for teachers is likely to
increase the downward pressure on teacher quality.
Now is the time to redouble efforts to ensure that teachers are properly
prepared and certified and receive the ongoing support and professional
development they need to be effective educators.
Title I
PARENT RIGHT TO KNOW
Each public school that receives funds under the Elementary and Secondary
Education Act shall make available to the parents of each student
information regarding the qualification's of the student's teacher, both
generally and with regard to the content area or areas in which the teacher
provides instruction.
Title II
STATE EDUCATIONAL PLANS
States receiving federal funds for elementary and secondary education shall:
Ensure that all teachers have demonstrated the subject matter knowledge,
teaching knowledge, and teaching skill necessary to teach effectively in the
content area or areas in which they provide instruction.
Have in place an effective mechanism to remove incompetent or unqualified
teachers.
Aggressively recruit teachers for high-need areas and provide incentives for
teaching in such areas.
Title III
FEDERAL FUNDS USED IN THE PREPARATION OF TEACHERS
Federal funds shall be provided to postsecondary schools for the purpose of
preparing or training teachers only if such postsecondary school meets
nationally recognized professional standards for accreditation or if 90% of
graduates who become teachers pass state and local licensing requirements.
Title IV
INCENTIVES FOR QUALIFIED TEACHERS TO ENTER HIGH-NEED AREAS
Provide student loan forgiveness for those who enter teaching in high need
areas if they have demonstrated the subject matter knowledge, teaching
knowledge, and teaching skill necessary to teach effectively in the content
area or areas in which they provide instruction.
Provide loan forgiveness for who have been teaching in high-need areas for
at least five years and who pursue and achieve advanced teaching standards.
Title V
BEGINNING TEACHER RECRUITMENT AND SUPPORT
Authorizes support for community-based partnerships that recruit, train, and
support qualified entry-level teachers in high-need areas.
Title VI
NON-APPLICABILITY TO HOME AND PRIVATE SCHOOLS
Nothing in this Act shall be construed to permit, allow, encourage or
authorize any federal control over any aspect of any private, religious, or
home school that does not receive federal funds or does not participate in
federal programs or services.
F:\M5\MILLCA\MILLCA038
H.L.C.
105TH CONGRESS
1ST SESSION
H.R.
IN THE HOUSE OF REPRESENTATIVES
M. introduced the following bill; which was referred to the Committee on
A
BILL
To increase the number of qualified teachers.
1
Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
3 SECTION 1. SHORT TITLE.
4
This Act may be cited as the "Teaching Excellence
5 for All Children Act of 1997".
6 SEC. 2. STATEMENT OF POLICY; FINDINGS.
7
(a) STATEMENT OF POLICY.-The Congress declares
8 it to be the policy of the United States that each student
9 shall have a competent and qualified teacher.
10
(b) FINDINGS.-Congress finds the following:
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H.L.C.
2
1
(1) The number of elementary and secondary
2
school students is expected to increase each succes-
3
sive year between now and the year 2006, at which
4
time total enrollment will reach 54,600,000.
5
(2) As the number of students increases, the
6
need for qualified teachers will increase. Increases in
7
enrollment and teacher retirements together will cre-
8
ate demand for 2,000,000 new teachers by the year
9
2006.
10
(3) The lack of qualified teachers to meet this
11
demand is a significant barrier to students receiving
12
an appropriate education.
13
(4)
The National Commission on Teaching and
14
America's Future has found that one-quarter of the
nation's classroom teachers are not fully qualified to
15
teach in their subject areas. Unless corrective action is
taken at the local, State, and Federal levels, the
16
additional demand for teachers is likely to result in a
further decline in teacher quality.
17
18
19
(5) Now is the time to redouble efforts to en-
20
sure that teachers are properly prepared and quali-
21
fied and receive the ongoing support and profes-
22
sional development they need to be effective edu-
23
cators.
July 21, 1997
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H.L.C.
3
1
TITLE I-PARENTAL RIGHTS
2 SEC. 101. PARENTAL RIGHT TO KNOW.
3
Part E of title XIV of the Elementary and Secondary
4 Education Act of 1965 is amended by inserting after sec-
5 tion 14514 (20 U.S.C. 8904) the following new section:
6 "SEC. 14515. TEACHER QUALIFICATIONS.
7
"Any public elementary or secondary school that re-
8 ceives funds under this Act shall make available to the
9 parents of each student information regarding the quali-
10 fications of each of the student's teachers, both generally
11 and with regard to the content area or areas in which each
12 teacher provides instruction.".
13 TITLE II-QUALIFIED TEACHERS
14 SEC. 201. ENSURING A QUALIFIED TEACHER IN EVERY
15
CLASSROOM.
16
To be eligible to receive funds under the Elementary
17 and Secondary Education Act of 1965, each State shall
18 ensure that-
19
(1) each teacher in a public elementary or sec-
20
ondary school in the State has demonstrated the
21
subject matter knowledge, teaching knowledge, and
22
teaching skill necessary to teach effectively in the
23
content area or areas in which the teacher provides
24
instruction;
July 21, 1997
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H.L.C.
4
1
(2) each teacher in the State for whom such
2
qualifications have been waived temporarily to re-
3
spond to emergency teacher shortages or other cir-
4
cumstances must, not later than 3 years after such
5
waiver, demonstrate the subject matter knowledge,
6
teaching knowledge, and teaching skill necessary to
7
teach effectively in the content area or areas in
8
which the teacher provides instruction;
9
(3) no student will be taught for more than 2
10
consecutive years by a teacher who does not meet
11
the criteria under paragraph (1);
12
(4) the State provides incentives for teachers to
13
pursue and achieve advanced teaching and subject
14
area content standards;
15
(5) the State has in place an effective mecha-
16
nism to remove incompetent or unqualified teachers;
17
and
18
(6) The State aggressively helps schools,
particularly those in high need areas, recruit
19
and retain qualified teachers.
20
July 21, 1997
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H.L.C.
5
1
TITLE
III-FEDERAL
FUNDS
2
USED IN THE PREPARATION
3
OF TEACHERS
4 SEC. 301. MINIMUM TEACHER TRAINING STANDARDS.
5
Title V of the Higher Education Act of 1965 is
6 amended by inserting after section 500 (20 U.S.C. 1101)
7 the following new section:
8 "SEC. 500A. MINIMUM TEACHER TRAINING STANDARDS.
9
"(a) GENERAL REQUIREMENT.-Any institution of
10 higher education that receives, directly or indirectly, any
11 funds appropriated pursuant to this or any other Federal
12 law for the purpose of preparing or training teachers
13 shall-
14
"(1) meet nationally recognized professional
15
standards for accreditation; or
16
"(2) demonstrate to the Secretary that at least
17
90 percent of the graduates of such institution who
18
enter the field of teaching take, and pass on their
19
first attempt, the State teacher qualification assess-
20
ment for new teachers.
21
"(b) AUTHORITY OF SECRETARY TO WAIVE.-The
22 Secretary may issue a one-time waiver, for a duration of
23 no more than 5 years, in any case in which an institution
24 of higher education can demonstrate a bona fide commit-
July 21, 1997
F:\M5\MILLCA\MILLCA.038
H.L.C.
6
1 ment to, and demonstrate measurable progress toward,
2 meeting the requirements of subsection (a).".
3 TITLE IV-INCENTIVES FOR IN-
4
CREASING THE SUPPLY OF
5
QUALIFIED TEACHERS
6 SEC. 401. LOAN FORGIVENESS.
7
(a) GUARANTEED LOANS.-Section 437 of the Act is
8 amended-
9
(1) in the section heading, by striking out the
10
period at the end thereof and inserting in lieu there-
11
of a semicolon and "LOAN FORGIVENESS FOR
12
TEACHING";
13
(2) by amending the heading for subsection (c)
14
to read as follows: "DISCHARGE RELATED TO
15
SCHOOL CLOSURE OR FALSE CERTIFICATION.-";
16
and
17
(3) by adding at the end thereof the following
18
new subsection:
19
"(e) CANCELLATION OF LOANS FOR TEACHING.-(1)
20 The Secretary shall discharge the liability of a borrower
21 of a loan made under section 428, 428H, or 428C (to the
22 extent that a loan made under section 428C repays a loan
23 made under section 428 or 428H) on or after the date
24 of enactment of the Teaching Excellence for All Children
25 Act of 1997, to students who have not previously borrowed
July 21, 1997
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H.L.C.
7
1 under any of such sections, by repaying the amount owed
2 on the loan, to the extent specified in paragraph (3), for
3 service described in paragraph (2) as a full time teacher
4 who has demonstrated, in accordance with State teacher
5 certification or licensing law, the subject matter knowl-
6 edge, teaching knowledge, and teaching skill necessary to
7 teach effectively in the content area or areas for which
8 the borrower provides instruction.
9
"(2)(A) A loan shall be discharged under paragraph
10 (1) for service by the borrower as a full-time teacher for
11 1 or more academic years in a public elementary or sec-
12 ondary school—
13
"(i)(I) in the school district of a local edu-
14
cational agency that is eligible in that academic year
15
for assistance under title I of the Elementary and
16
Secondary Education Act of 1965; and
17
"(II) that, for that academic year, has been de-
18
termined by the Secretary to be a school in which
19
the enrollment of children counted under section
20
1124(c) of that Act exceeds 30 percent of the total
21
enrollment of that school; or
22
"(ii) in an academic subject matter area in
23
which the State or local educational agency deter-
24
mines to the satisfaction of the Secretary that there
25
is a shortage of qualified teachers.
July 21, 1997
F:\M5\MILLCA\MILLCA038
H.L.C.
8
1
"(B) A loan shall be discharged under paragraph (1)
2 at the rate provided in paragraph (3)(B) for service de-
3 scribed in clause (i) or (ii) of subparagraph (A) by the
4 borrower as a full-time teacher for 1 or more academic
5 years if such borrower-
6
"(i) has engaged in such service for each of the
7
5 preceding academic years; and
8
"(ii) has pursued and achieved advanced teach-
9
ing credentials.
10
"(3)(A) Loans shall be discharged under paragraph
11 (1) for service described in paragraph (2) (A) at the rate
12 of-
13
"(i) 20 percent for the first or second complete
14
academic year of such service, which amount for
15
each year shall not exceed $6,000;
16
"(ii) 25 percent for the third complete year of
17
such service, which amount shall not exceed $7,500;
18
and
19
"(iii) 35 percent for the fourth complete year of
20
such service, which amount shall not exceed
21
$10,500;
22 except that the total amount for all such academic years
23 shall not exceed $30,000.
24
"(B) Loans shall be discharged under paragraph (1)
25 for service described in paragraph (2)(B) at the rate of
July 21, 1997
F:\M5\MILLCA\MILLCA.038
H.L.C.
9
1 50 percent for each complete academic year of such serv-
2 ice, except that the total amount discharged shall not ex-
3 ceed $5,000 for any borrower.
4
"(C) If a portion of a loan is discharged under sub-
5 paragraph (A) or (B) for any year, the entire amount of
6 interest on that loan that accrues for that year shall also
7 be discharged by the Secretary.
8
"(D) Nothing in this section shall be construed to au-
9 thorize refunding of any repayment of a loan.
10
"(4) The amount of a loan, and interest on a loan,
11 that is canceled under this subsection shall not be consid-
12 ered income for purposes of the Internal Revenue Code
13 of 1986.
14
"(5) No borrower may, for the same volunteer serv-
15 ice, receive a benefit under both this subsection and sub-
16 title D of title I of the National and Community Service
17 Act of 1990 (42 U.S.C. 12571 et seq.).
18
"(6) The Secretary shall specify in regulations the
19 manner in which lenders shall be reimbursed for loans
20 made under this part, or portions thereof, that are dis-
21 charged under this subsection.
22
"(7) If the list of schools in which a teacher may per-
23 form service pursuant to paragraph (2) is not available
24 before May 1 of any year, the Secretary may use the list
July 21, 1997
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H.L.C.
10
1 for the year preceding the year for which the determina-
2 tion is made to make such service determination.
3
"(8) Any teacher who performs service in a school
4 which—
5
"(A) meets the requirements of paragraph (2)
6
in any year during such service; and
7
"(B) in a subsequent year fails to meet the re-
8
quirements of such subsection,
9 may continue to teach in such school and shall be eligible
10 for loan cancellation pursuant to paragraph (1) with re-
11 spect to such subsequent years.".
12
(b) DIRECT LOANS.-Part D of title IV of the Act
13 is amended by inserting after section 458 (20 U.S.C.
14 1087h) the following new section:
15 "SEC. 459. CANCELLATION OF LOANS FOR CERTAIN PUBLIC
16
SERVICE.
17
"(a) CANCELLATION OF PERCENTAGE OF DEBT
18 BASED ON YEARS OF QUALIFYING SERVICE.-
19
"(1) IN GENERAL.-The percent specified in
20
paragraph (3) of the total amount of any loan made
21
under this part after the date of enactment of the
22
Teaching Excellence for All Children Act of 1997, to
23
students who have not previously borrowed under
24
this part, shall be canceled for each complete year
25
of service after such date by the borrower under cir-
July 21, 1997
F:\M5\MILLCA\MILLCA.038
H.L.C.
11
1
cumstances described in paragraph (2) for service as
2
a full time teacher who has demonstrated, in accord-
3
ance with State teacher certification or licensing law,
4
the subject matter knowledge, teaching knowledge,
5
and teaching skill necessary to teach effectively in
6
the content area or areas for which the borrower
7
provides instruction.
8
"(2) QUALIFYING SERVICE.-
9
"(A) IN GENERAL.-A loan shall be dis-
10
charged under paragraph (1) for service by the
11
borrower as a full-time teacher for 1 or more
12
academic years in a public elementary or sec-
13
ondary school—
14
"(i)(I) in the school district of a local
15
educational agency that is eligible in that
16
academic year for assistance under title I
17
of the Elementary and Secondary Edu-
18
cation Act of 1965; and
19
"(II) that, for that academic year, has
20
been determined by the Secretary to be a
21
school in which the enrollment of children
22
counted under section 1124(c) of that Act
23
exceeds 30 percent of the total enrollment
24
of that school; or
July 21, 1997
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H.L.C.
12
1
"(ii) in an academic subject matter
2
area in which the State or local edu-
3
cational agency determines to the satisfac-
4
tion of the Secretary that there is a short-
5
age of qualified teachers.
6
"(B) ACCELERATED DISCHARGE.-A loan
7
shall be discharged under paragraph (1) at the
8
rate provided in paragraph (3) (B) for service
9
described in clause (i) or (ii) of subparagraph
10
(A) by the borrower as a full-time teacher for
11
1 or more academic years if such borrower-
12
"(i) has engaged in such service for
13
each of the 5 preceding academic years;
14
and
15
"(ii) has pursued and achieved ad-
16
vanced teaching credentials.
17
"(3) PERCENTAGE OF CANCELLATION.-
18
"(A) IN GENERAL.-Loans shall be dis-
19
charged under paragraph (1) for service de-
20
scribed in paragraph (2)(A) at the rate of-
21
"(i) 20 percent for the first or second
22
complete academic year of such service,
23
which amount for each year shall not ex-
24
ceed $6,000;
July 21, 1997
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H.L.C.
13
1
"(ii) 25 percent for the third complete
2
year of such service, which amount shall
3
not exceed $7,500; and
4
"(iii) 35 percent for the fourth com-
5
plete year of such service, which amount
6
shall not exceed $10,500;
7 except that the total amount for all such academic years
8 shall not exceed $30,000.
9
"(B) ACCELERATED DISCHARGE.-Loans
10
shall be discharged under paragraph (1) for
11
service described in paragraph (2) (B) at the
12
rate of 50 percent for each complete academic
13
year of such service, except that the total
14
amount discharged shall not exceed $5,000 for
15
any borrower.
16
"(C) TREATMENT OF INTEREST.-If a
17
portion of a loan is discharged under subpara-
18
graph (A) or (B) for any year, the entire
19
amount of interest on that loan that accrues for
20
that year shall also be discharged by the Sec-
21
retary.
22
"(D) REFUNDING PROHIBITED.-Nothing
23
in this section shall be construed to authorize
24
refunding of any repayment of a loan.
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H.L.C.
14
1
"(4) DEFINITION.-For the purpose of this sec-
2
tion, the term 'year' where applied to service as a
3
teacher means an academic year as defined by the
4
Secretary.
5
"(5) TREATMENT OF CANCELED AMOUNTS.-
6
The amount of a loan, and interest on a loan, which
7
is canceled under this section shall not be considered
8
income for purposes of the Internal Revenue Code of
9
1986.
10
"(6) PREVENTION OF DOUBLE BENEFITS.-No
11
borrower may, for the same volunteer service, receive
12
a benefit under both this section and subtitle D of
13
title I of the National and Community Service Act
14
of 1990 (42 U.S.C. 12571 et seq.).
15
"(b) SPECIAL RULES.-
16
"(1) LIST.-If the list of schools in which a
17
teacher may perform service pursuant to subsection
18
(a)(2)(A) is not available before May 1 of any year,
19
the Secretary may use the list for the year preceding
20
the year for which the determination is made to
21
make such service determination.
22
"(2) CONTINUING ELIGIBILITY.-Any teacher
23
who performs service in a school which-
24
"(A) meets the requirements of subsection
25
(a)(2)(A) in any year during such service; and
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H.L.C.
15
1
"(B) in a subsequent year fails to meet the
2
requirements of such subsection,
3
may continue to teach in such school and shall be
4
eligible for loan cancellation pursuant to subsection
5
(a)(1) with respect to such subsequent years.".
6
TITLE V-BEGINNING TEACHER
7
RECRUITMENT AND SUPPORT
8 SEC. 501. PROGRAM ESTABLISHED.
9
Title V of the Higher Education Act of 1965 is
10 amended by adding at the end the following new part:
11
"PART G-BEGINNING TEACHER RECRUITMENT
12
AND SUPPORT
13 "SEC. 599A. PROGRAM AUTHORIZED.
14
"(a) GRANTS BY THE SECRETARY.-The Secretary
15 shall use funds pursuant to this subpart to make grants,
16 on a competitive basis, to Beginning Teacher Recruitment
17 and Support partnerships for the purpose of recruiting,
18 training, and supporting qualified entry-level teachers.
19
"(b) DURATION.-Grants shall be awarded for a pe-
20 riod of 3 years, of which no more than 1 year may be
21 used for planning and preparation.
22
"(c) BEGINNING TEACHER RECRUITMENT AND SUP-
23 PORT PARTNERSHIP.-For the purposes of this subpart,
24 the term 'Beginning Teacher Recruitment and Support
25 Partnership' means a partnership consisting of-
July 21, 1997
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H.L.C.
16
1
"(1) a local educational agency, a subunit of
2
such agency, or a consortium of such agencies; and
3
"(2) 1 or more nonprofit organizations, includ-
4
ing institutions of higher education-
5
"(A) each of which must have a dem-
6
onstrated record of success in teacher prepara-
7
tion and staff development;
8
"(B) which must have expertise and a
9
demonstrated record of success, either collec-
10
tively or individually, in providing teachers with
11
the subject matter knowledge, teaching knowl-
12
edge, and teaching skills necessary for them to
13
teach effectively in each and every content area
14
in which they plan to prepare teachers to pro-
15
vide instruction under a grant made under this
16
subpart; and
17
"(C) which include at least 1 teacher prep-
18
aration institution that has met the criteria
19
under section 500A (as added by section 301 of
20
the Teaching Excellence for All Children Act of
21
1997).
22 These entities shall jointly develop and submit their pro-
23 posal to the Department of Education.
24
"(d) BEGINNING TEACHER RECRUITMENT AND SUP-
25 PORT SCHOOL.-For the purpose of this subpart, a 'Be-
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H.L.C.
17
1 ginning Teacher Recruitment and Support School' is de-
2 fined as a public elementary or secondary school-
3
"(1)(A) in a school district that is eligible for
4
assistance under title I of the Elementary and Sec-
5
ondary Education Act of 1965; and
6
"(B) that has been determined by the Secretary
7
to be a school in which the enrollment of children
8
counted under section 1124(c) of that Act exceeds
9
30 percent of the total enrollment of the school; or
10
"(2) where the State or local educational agen-
11
cy determines to the satisfaction of the Secretary
12
that there is a shortage of qualified teachers.
13 "SEC. 599B. USES OF FUNDS.
14
"(a) BEGINNING TEACHER RECRUITMENT AND SUP-
15 PORT PARTNERSHIPS.-Each partnership receiving a
16 grant under this subpart shall use funds to-
17
"(1) recruit and screen teaching applicants;
18
"(2) establish and conduct intensive summer
19
preplacement professional development seminars for
20
participating Beginning Teacher Recruitment and
21
Support teachers;
22
"(3) establish and conduct ongoing and inten-
23
sive professional development and support programs
24
for Beginning Teacher Recruitment and Support
25
members for their first 2 years of service; and
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18
1
"(4) annually evaluate the performance of Be-
2
ginning Teacher Recruitment and Support teachers
3
to determine whether they meet standards for con-
4
tinued participation.
5
"(b) CRITERIA.-
6
"(1) IN GENERAL.-The partnership shall select
7
participating Beginning Teacher Recruitment and
8
Support teachers according to criteria designed to-
9
"(A) attract highly qualified individuals to
10
teaching, including individuals with post-college
11
employment experience who plan to enter teach-
12
ing from another occupational field; and
13
"(B) meet the needs of participating
14
schools in addressing shortages of qualified
15
teachers in specific academic subject areas.
16
"(2) SPECIFIC CRITERIA.-Such criteria shall
17
include that each Beginning Teacher Recruitment
18
and Support applicant selected has demonstrated the
the
19
ability to attain subject matter knowledge, teaching
20
knowledge, and teaching skills necessary to teach ef-
21
fectively in the content area or areas in which they
22
will provide instruction.
23
"(3) SPECIAL CONSIDERATION.-Particular ef-
24
fort should be made to recruit individuals who are
25
members of populations that are underrepresented
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19
1
in the teaching profession, especially in the curricu-
2
lar areas in which such individuals are preparing to
3
teach.
4
"(4) MINIMUM NUMBER OF TEACHERS PER
5
SCHOOL.-The partnership must ensure that the
6
number of beginning teachers is equal to no less
7
than 3 percent of the faculty of the schools to which
8
they are assigned, except that ii no circumstance
9
shall fewer than 2 beginning teachers be assigned to
10
each school.
11 "SEC. 599C. PARTNERSHIP APPLICATION.
12
"In order to receive funds under this subpart, a part-
13 nership shall submit an application to the Secretary at
14 such time, in such manner, and containing such informa-
15 tion as the Secretary may reasonably require. Each appli-
16 cation shall-
17
"(1) describe how the partnership shall select
18
Beginning Teacher Recruitment and Support mem-
19
bers;
20
"(2) describe how recruitment will meet the
21
needs of participating Beginning Teacher Recruit-
22
ment and Support Schools, especially with regard to
23
the particular academic subject areas in which there
24
is a shortage of qualified teachers;
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H.L.C.
20
1
"(3) describe how the partnership will advance
2
the subject matter knowledge, teaching knowledge,
3
and teaching skill of all Beginning Teacher Recruit-
4
ment and Support members in the Summer Insti-
5
tutes and in ongoing professional development and
6
support activities;
7
"(4) describe how existing school faculty will be
8
involved in the planning and execution of the Sum-
9
mer Institutes and ongoing professional development
10
and support activities, including paired mentorships
11
between Beginning Teacher Recruitment and Sup-
12
port members and experienced classroom teachers;
13
"(5) provide assurances that Beginning Teacher
14
Recruitment and Support members are paid at rates
15
comparable to other entry level teachers in the
16
school district where the Beginning Teacher Recruit-
17
ment and Support member is assigned;
18
"(6) describe how the Beginning Teacher Re-
19
cruitment and Support Partnership will monitor,
20
and report not less than annually on, the progress
21
of Beginning Teacher Recruitment and Support
22
members, including:
23
"(A) the retention rate for Beginning
24
Teacher Recruitment and Support teachers in
25
comparison with other teachers in the same
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H.L.C.
21
1
schools in which Beginning Teacher Recruit-
2
ment and Support members teach; and
3
"(B) the academic achievement of students
4
served by Beginning Teacher Recruitment and
5
Support teachers, in comparison to those stu-
6
dents taught by other entry-level teachers; and
7
"(7) describe direct and indirect contributions
8
to the overall cost of the program by the State and
9
local educational agency, and the extent to which the
10
Beginning Teacher Recruitment and Support Part-
11
nership activities will be integrated with other pro-
12
fessional development and educational reform ef-
13
forts.".
14
TITLE VI-GENERAL
15
PROVISIONS
16 SEC. 601. GENERAL PROVISION REGARDING NONRECIP-
17
IENT NONPUBLIC SCHOOLS.
18
Nothing in this Act shall be construed to permit,
19 allow, encourage, or authorize any Federal control over
20 any aspect of any private or religious school that does not
21 receive Federal funds or does not participate in Federal
22 programs or services under the Elementary and Secondary
23 Education Act of 1965.
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H.L.C.
22
1 SEC. 602. APPLICABILITY TO HOME SCHOOLS.
2
Nothing in this Act shall be construed to affect home
3 schools.
July 21, 1997