Interest groups and political organizations are gearing up for a battle on higher education issues this term. The newly-elected Congress begins consideration of important student financial aid legislation when it convenes in January.
Congress was forced to delay the renewal of the Higher Education Act this year, an act which governs most federal aid to colleges and imposes procedural and regulatory requirements nationwide. Congress passed a temporary stopgap measure last fall to maintain federal funding at its current levels until the act could be renewed in a calmer political climate after the November elections.
Officials in the House of Representatives say they will begin deliberation on the renewal soon after the new Congress meets this January.
A particularly controversial proposal for the new bill involves the use of variable interest rates, rather than fixed interest rates, for students consolidating their federally-subsidized loans.
The change would increase costs for many current students who consolidate their loans after graduation, because the loans would no longer maintain the low interest rates of the past several years.
Several higher education groups have strongly criticized the proposal, and Georgetown administrators have expressed their concern with any plan to switch to a variable rate system, especially if the savings from the program are diverted to fund programs outside higher education.
Scott Fleming (SFS ’72), assistant to the president for federal relations, said the university, while officially in opposition to the change, may be more receptive if savings from the transfer were distributed to other student aid programs such as Pell grants.
“If those savings are plowed back into the program, that may make the issue more palatable,” Fleming said.
Alexa Marrero, press secretary for the House Committee on Education and the Workforce, said that the main points of the legislation are unlikely to change when the reauthorization issue is reintroduced in the new Congress.
She also defended the variable-rate change, which has received the backing of both Workforce and Education Committee Chairman John Boehner (R-Ohio) and Rep. Buck McKeon (R-Calif.), who chairs the subcommittee with jurisdiction over the HEA.
Marrero said the savings from the new loan rate system would likely be used to help needy students take out loans by reducing the fees applied when students receive new loans.
“Our number one priority is trying to expand college access for lower-income and middle-income students,” she said.
The level of funding for the Pell grant program is also likely to be a central issue in the HEA reauthorization debate. Although funding for the program has increased over the past three years, the maximum Pell grant amount has remained at $4,050 because more students have been receiving the grants.
Administrators said the stagnant Pell grant maximum is particularly problematic for Georgetown because it is limited by an enrollment cap imposed by the District of Columbia and therefore cannot simply accept more students to help defer increasing costs.
“We work very hard to hold costs down to the extent we can . [But] at the end of the day, to balance the books, tuition is raised” because the university has no other option, Fleming said.
Over half of the undergraduate population and over 65 percent of the graduate population receive some form of financial aid, said Patricia McWade, dean of Student Financial Services.
Federal aid to Georgetown students was $130.7 million in the 2003-04 school year. That figure includes $1.8 million in Pell grants, $3.1 million in federal work-study programs, and $85 million in federal Stafford loans, McWade said.
Georgetown, with its relatively small endowment, is particularly dependent on federal aid. Increasing security costs, health care costs for employees and debts accrued from the Medical Center have all contributed to lower available funds for Georgetown-based student aid.
Fleming said that one of the reasons for last year’s 7 percent tuition hike was increasing need for institutional student aid. Georgetown-based aid to students increased 21 percent this year, he said.
The university also expressed concern over a plan in the draft bill to reconfigure the formula by which federal aid is allocated to some institutions.
Georgetown, along with other East Coast universities such as Harvard and Dartmouth, was one of the first institutions to participate in the federal formula system. When the formula was changed to encompass all universities in the country, Georgetown and a handful of other universities remained under the old formula.
Fleming said it was probable that the proposed revision, which would phase out the old formula over several years, would reduce the amount of aid Georgetown receives, perhaps substantially.
He said he hoped that any reduction in student aid would be accompanied by a corresponding increase in student aid funding.
Other controversial issues in the draft bill include a requirement that universities alter their reporting practices to the Department of Education, a change that could cost Georgetown over $100,000.
Supporters of these provisions argue they are necessary to create a more efficient accounting and distribution process and help stem rising federal budget deficits while ensuring access to low-income students.
Fleming said he was optimistic about dealing with the new Congress as it begins consideration of the HEA bill next year.
“We will be looking at this bill from a perspective of holding down costs, and from a perspective of making sure” financial aid funding increases while academic freedoms are protected, Fleming said.
Liam Alling (MSB ’08), who has a federal work-study grant, said he hopes Congress will choose to allocate more funding for the work-study program during its next term.
“[A work-study job] usually pays decently and the jobs aren’t too difficult,” Alling said. “That way, it sort of feels like the student is earning the money they’re getting.”
Jane Camp (COL ’06), who has federal Stafford and Perkins loans as well as a work-study grant, said that she supports the variable-rate change even though her costs may increase.
“It might not work out for me so well, but for a lot of people who graduated in the early 90s, it’s not working out too well,” she said. “You should be able to reconsolidate whenever a better interest rate comes up.”