The Honorable John A. Boehner, Chairman
House Education and the Workforce Committee
United States House of Representatives
1011 Longworth House Office Building
Washington DC 20515
The Honorable Howard P. “Buck” McKeon, Chairman
Subcommittee on 21st Century Competitiveness
United States House of Representatives
2351 Rayburn House Office Building
Washington, DC 20515
Dear Chairmen Boehner and McKeon:
The American Association of State Colleges and Universities (AASCU) appreciates the opportunity to offer suggestions on the substitute bill, "College
Access and Opportunity Act of 2005" (H.R. 609) marked up by the House Subcommittee on 21st Century Competitiveness on July 15. AASCU represents more
than 430 public colleges, universities and systems of higher education throughout the United States and its territories. AASCU schools enroll more than
three million students or 55 percent of the enrollment at all public four-year institutions.
AASCU submits the following comments on H.R. 609 as marked up by the House Subcommittee on 21st Century Competitiveness. AASCU’s comments are consonant
with the comments that we submitted last year in our letter of May 26, 2004 on H.R. 4283. (Attachment).
PELL GRANTS
We strongly support the reauthorization of the Pell Grant program, which provides the foundation grants for low- and middle-income students to finance
postsecondary education. We continue to support authorized increases in the maximum award above $5800 to indicate the importance of these grants in helping
students finance college without incurring excessive debt, and propose that the bill be modified to reflect these increases. (Attachment). The average
cost of attendance at an AASCU institution is now $10,370.
FEDERAL PELL GRANT AUTHORIZATION LEVELS
The amount of the Federal Pell Grant for a student eligible under this part.
shall be –
(i) $5,800 for academic year 2005-2006;
(ii) $6,100 for academic year 2006-2007;
(iii) $6,400 for academic year 2007-2008;
(iv) $6,700 for academic year 2008-2009;
(v) $7,000 for academic year 2009-2010,
(vi) $7,400 for academic year 2010-2011,
less an amount equal to the amount determined to be the expected family contribution with respect to that student for that year.
We support the authority in the bill for year-round Pell Grants to enable students to complete college faster, but we prefer the proposal of the Administration,
which would make year-round Pell Grants available to students in two-year as well as four-year programs.
Regarding Pell Grants Plus: Achievement Grants for State Scholars, we propose that there be a separate authorization limit for this program to avoid
diluting the funding for the basic Pell Grant program.
LOANS
We support the increases in 1st and 2d year Stafford loan limits, while retaining the existing aggregate undergraduate limit. We support retaining variable
rates for Stafford loans, but believe that 6.8percent should be the maximum rate in both the Federal Family Education Loan (FFEL) and Direct Loan programs.
We support giving borrowers an option on Consolidation loans of either a fixed or variable rate, but believe again that the maximum should be 6.8percent.
We support the provision recapturing excess interest paid to lenders in the FFEL program. AASCU support efficient lender subsidies in the FFEL program
and believes that federal subsidies should be targeted on students to the maximum extent.
We strongly oppose the requirement that borrowers in the FFEL program pay a 1percent federal default fee. We believe that each entity involved in operating
the FFEL program should concentrate on ensuring that all borrowers in repayment status are in an appropriate repayment plan, and not charge borrowers
for the failure of agencies to succeed.
We strongly oppose the requirement that the Direct Loan extended repayment provision be curtailed, and made the same as the FFEL extended repayment
provision, which limits extended repayment to borrowers with debt above $30,000, thereby forcing borrowers to consolidate in order to get more flexible
extended repayment. We support the Administration’s proposal making extended repayment in both the FFEL and Direct Loan programs the same as the
extended repayment provisions in the Consolidation programs. AASCU does not believe that borrowers in either the Direct Loan or the FFEL program should
have to consolidate their loans in order to have access to extended repayment.
Similarly, we strongly oppose eliminating the right, under current law, of the FFEL Stafford borrower to consolidate into the Direct Loan program as
long as the lender offer income-sensitive repayment provisions, even if these provisions are not “acceptable to the borrower”.
Eliminating “acceptable to the borrower” as proposed in H.R. 609 would give total discretion to the lender as to whether the FFEL borrower
could consolidate into the Direct Loan program, which offers Income-Contingent Repayment (ICRP). Borrowers who have serious debt-to-income ratio problems,
and cannot afford to pay at least interest on their loans, need access to this program, which ties payments to the borrower’s income according to
formulas established by regulations of the Secretary.
If the borrower’s option to consolidate into the Direct Loan program were eliminated, FFEL Stafford borrowers who need ICRP must first consolidate
their loans in the FFEL program, and then consolidate into the Direct Loan program. This complicated sequence would demand unreasonable program sophistication
on the part of borrowers, and unrealistic willingness to do detailed counseling on the part of lenders and servicers.
We also oppose the language amending section 455 that prohibits borrowers with FFEL Consolidation loans from reconsolidating into the Direct Loan program
“only for the purposes of obtaining an income contingent repayment plan.” Borrowers whose income circumstances improve while in ICRP should
be eligible in the Direct Loan program to convert to a traditional amortization schedule and repay their loans as quickly as possible. The second sentence
of section 428C (b)(5) of current law specifically gives the FFEL borrower who consolidates into the Direct Loan program the right to repay under the
ICRP or any other repayment plan.
We support phasing out origination fees for students in both programs.
We strongly oppose, however, prohibiting the Secretary from continuing to provide repayment incentives in the Direct Loan program. Under current law,
lenders in the FFEL program would be able to offer these incentives. The elimination of these incentives in the Direct Loan program would have the effect
of offering fewer benefits to borrowers in the Direct Loan program than lenders are offering in the FFELP.
ACCOUNTABILITY
We do not support the amendment added in mark-up, which would prohibit the Secretary from conducting a unit record survey for data on postsecondary students.
We strongly believe that the Secretary should be able to develop a plan for improvements in federal data requirements on graduation rate and net price
without the process for collecting the data being restricted. We believe that graduation rates should be broken down to reflect the risk groups developed
in recent NCES surveys to ensure that the work of institutions in serving non-traditional students is not misrepresented, and that net price data should
appropriately reflect the financial needs of the institutions’ student bodies. We remain ready to work with the Secretary to ensure these goals.
Again, we appreciate the opportunity to make these suggestions, and look forward to working with the Committee as reauthorization proceeds.
Respectfully,
Edward M. Elmendorf
Senior Vice President for Government Relations and Policy Analysis
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