Georgetown administrators lauded a decision by the U.S. Senate education committee earlier this month that would reauthorize the Higher Education Act, a federal law governing federal aid to universities nationwide.
The bill, approved by the Senate Committee on Health, Education, Labor and Pensions, includes provisions that would increase the maximum Pell Grant for needy students from $4,050 to $5,100 and preserve the Perkins Loan program, which provided an average of $4,500 to approximately 1,500 Georgetown undergraduate and graduate students last year.
This summer, the House’s Committee on Education and the Workforce proposed its own version of a bill reauthorizing the Higher Education Act. The House’s bill would also preserve Perkins Loans and increase the maximum Pell Grant. Unlike the Senate bill, however, it would change the formula used to allocate funds to universities for student loan programs like Pell Grants, Federal Work-Study and Supplemental Educational Opportunity Grants, or SEOGs.
The bill would also penalize universities whose tuitions increase faster than twice the growth rate of the Consumer Price Index, a common measure of inflation.
Georgetown currently maintains approximately $27 million in federal Perkins Loans funding in a revolving loan account. If the loans were eliminated, the university would have to return that money to the federal government.
In a letter sent to Georgetown alumni serving in Congress, University President John J. DeGioia praised lawmakers for retaining Perkins Loans but urged them to consider the perspective of universities on issues involving federal funding.
“I am grateful that the [House] committee-reported bill would maintain the Perkins Loan program and provide authorization for continued capital contributions and loan forgiveness funding,” he said.
Scott Fleming (SFS ’72), university assistant to the president for federal relations, said that although Perkins Loans are not eliminated in either of the two bills reauthorizing the Higher Education Act, Congress is under significant pressure to find savings of $12.6 billion in the upcoming budget.
President Bush recommended that the Perkins Loans program be eliminated earlier this year, sparking an intense lobbying campaign by several universities, including Georgetown, to preserve the loans. Georgetown is particularly dependent on Perkins Loans to subsidize its financial aid program, which already lags behind those of many comparable universities.
Congress is currently proceeding with its budget reconciliation process, in which both the House and Senate agree on a final set of appropriations for the next fiscal year.
“At this point you would look at the bills and say the House and the Senate committees have rejected the president’s call,” Fleming said. “The concern is that the total amount of savings that the committees were directed to achieve, particularly in the House . hadn’t quite met the goal. Presumably if reconciliation goes forward, they’re going to have to go back and find another couple of billion dollars, and nobody knows where that might occur.”
Fleming said that the House Committee on Education and the Workforce had found approximately $2 billion in savings from pensions, but that much of the rest of savings required for budget reconciliation could likely be found in higher education programs.
“The initial plan was it would split 50-50,” Fleming said. “But the savings in pensions is dwarfed by the cuts in student aid, the savings in loan programs.”
Alexa Marrero, press secretary for the House committee, said that the committee has not yet reported savings to the budget committee and added “the process is still ongoing.” But she admitted that higher education will account for more of the savings than pensions.
“The issue is trying to address the expansion in spending,” Marrero said. “What the committee has identified is places in which the loan programs are not acting as efficiently as they can be.”
Patricia McWade, dean of Student Financial Services, said that during the last academic year, 55 percent of Georgetown students received some form of financial aid.
In total, Georgetown undergraduates received approximately $1.8 million in Pell Grants, $10.5 million in Stafford Loans, $2.3 million in Federal Work-Study, and $1.7 million in SEOGs, she said.
One important area in which the Senate and House bills differ is regulation of the interest rates for Stafford Loans. The Senate’s bill proposes changing the interest rates from the current variable rate capped at 8.25 percent to a fixed rate of 6.8 percent. The House’s bill, on the other hand, would preserve the variable rate.
The House’s bill to reauthorize the HEA also differs from the Senate’s version on the formula used to calculate how much money universities receive for on-campus loan programs, like Pell Grants, Federal Work-Study and SEOGs.
The current formula, which the Senate wants to preserve, guarantees universities that they will not receive less funds for loan programs than they received in previous years. The House committee’s bill would phase out this guarantee over the next 11 years and distribute money to schools on the basis of student need, Marrero explained.
“What the bill does is target the programs based on need,” she said. “It is a slow and careful phase-down to give schools adequate time to prepare.”
The new formula would, however, reduce government funds for many institutions like Georgetown that have traditionally been guaranteed to receive no less funding for on-campus loan programs.
“The Senate bill leaves the formula in place. The House bill phases out that protection, which is problematic for us, because it means that under those programs less funds will come to Georgetown. We need and want those funds,” Fleming said.
Another controversial provision in the House bill would force colleges and universities that increase tuition more than twice the growth of Consumer Price Index over a three-year span to be listed in a College Affordability Index.
Marrero said the provision is in response to a “significant outcry from the public about how much tuition is going up.”
Georgetown officials have countered that the provision would create an undue administrative burden for universities.
“The proposals as written rely on the Consumer Price Index, which does not accurately capture components such as . employee health insurance, liability coverage, technology and energy cost inflation,” DeGioia said in his letter.
Groups on campus have been trying to motivate students to petition their representatives to keep favorable loan programs. The Office of Federal Relations gave students prepared letters urging congressmen to not change the way funds are calculated.
GUSA passed a resolution Tuesday opposing the House education committee’s bill and set up a table in Red Square this week to raise student awareness.
“When legislation has a significant impact upon students at Georgetown, then those who are influenced by that legislation have a particularly strong and legitimate claim to being able to oppose it,” Dante Randazzo, external policy advisor for the Student Association, said.