CSU Office of Federal Relations

President, Democrats Propose Student Loan Repayment Options
June 16th, 2014

Last week, the White House and Senate Democrats made a push to provide relief to varying cohorts of former students with student loan debt. On June 9, President Obama signed an Executive Order aimed at potentially easing student loan repayment for millions of past borrowers. The order directs the Department of Education to expand its most generous income-based loan repayment program, known as Pay As You Earn (PAYE), which caps the amount a borrower must pay at 10 percent of borrower income, and forgives any unpaid amount after 20 years. Currently the PAYE program is limited to those who took out their first loan after September 30, 2007, and continued borrowing after September 30, 2011, although it was already set to become an option for all new borrowers on July 1. The President’s action would expand PAYE as an option for all earlier borrowers, and is expected to increase the number eligible by 5 million former students. The Department will have to engage in a regulatory process that means that this new option will be available late next year at the earliest. The Executive Order would also require the Department of Education to renegotiate debt collection contracts to provide greater incentives for student loan servicers to keep borrowers from defaulting on their loans, and direct the Department to better publicize the availability of the PAYE option.

Meanwhile, on June 11, Senate Democrats’ attempt to pass a student loan refinancing bill, S. 2432, the Bank on Students Emergency Loan Refinancing Act, was thwarted by Senate Republicans. Championed by Sen. Elizabeth Warren (D-MA), the legislation would allow federal and private student loan borrowers to refinance their student loans at today’s lower interest rates for new federal student loan borrowers. The cost to the Treasury would be paid for by implementing “the Buffett Rule,” which is a surtax on taxpayers earning in excess of $1 million per year.

While the student loan refinancing legislation is highly unlikely to progress beyond the Senate this year, the President’s action will take full effect in December, 2015. However, refinancing legislation, which is part of the Democrats’ “Fair Shot” agenda for the 2014 mid-term elections, may well become a theme in upcoming Higher Education Act (HEA) reauthorization legislation. In that event, paying for the high cost (expected to be about $58 billion over 10 years) would likely come either partially or fully from cuts or changes to other higher education programs. In a time of austere budgets for education, such offsets could become particularly problematic for larger programs, such as Pell Grants.

Higher Education Act Hearings Continue in Senate
May 28th, 2014

This month the Senate Health, Education, Labor and Pensions (HELP) Committee continued its consideration of the Higher Education Act (HEA) with two more “Round Table” hearings on the subjects of Minority Serving Intuitions (MSIs) and veterans’ education. In a departure from previous practice, the hearings were not presided over by HELP Committee Chairman Tom Harkin (D-IA) and Ranking Member Lamar Alexander (R-TN), but were instead overseen by other committee members.

The first, entitled “Strengthening Minority Serving Institutions: Best Practices and Innovations for Student Success,” was held on May 13, and presided over by “acting” Chair Kay Hagan (D-NC), and Ranking Member Rand Paul (R-KY). The second, entitled “Examining Access and Supports for Servicemembers and Veterans in Higher Education,” took place on May 22, and was presided over by Sen. Bernie Sanders (I-VT) and Sen. Richard Burr (R-NC). Senators Sanders and Burr also serve as the Chair and Ranking Member of the Senate Committee on Veterans’ Affairs. The HELP committee will likely hold additional informational hearings this year.

For its part, the House Committee on Education and the Workforce has concluded its reauthorization hearings. The Republican majority is reportedly in the process of preparing a draft reauthorization bill, which is expected to be unveiled later this summer. At this juncture, it is not expected to be a bi-partisan effort.

New Congressional Caucus to Champion California’s Public Colleges, Students
May 5th, 2014

On May 1, surrounded by students and recent graduates of the California State University (CSU) and University of California (UC) systems, Reps. Ami Bera (D-Elk Grove) and Jeff Denham (R-Hawthorne) announced the creation of the California Public Higher Education Caucus (CPHEC). Bera and Denham said CPHEC will advocate for the UC and CSU “schools and their students and support improvements to the quality, affordability, and accessibility of California’s public higher education system.” Tom Rivera, a 2013 SDSU graduate who currently works in Sen. Barbara Boxer’s office, represented CSU students at the event. The caucus currently has thirty members.

“The California State University greatly appreciates the efforts of Representatives Bera and Denham to create this caucus,” said CSU Chancellor Timothy P. White.  “The CSU provides an outstanding return on federal investments in our students, faculty research, and institutions.  Last year alone, 40,000 Pell Grant recipients earned bachelor’s degrees across our 23 campuses, well prepared to enter the workforce in high-demand fields ranging from information technology to agriculture.  We look forward to working with all members of the caucus and our partners in California public higher education to continue to improve graduation rates, keep student debt low, and move California’s economy forward.  On a personal note, California public higher education is in my DNA.  I have benefited from all three segments of California’s public institutions: Community College, two CSU campuses, and UC Berkeley.  I’ve also been on the faculty and in senior administration in the UC and now the CSU.  I am grateful for the caucus’s interest in making similar opportunities available to all Californians.”

California Dem Takano Joins House Education Committee
April 3rd, 2014

Freshman Representative Mark Takano (D-Riverside) has been named to the House Education & the Workforce committee. The former teacher and community college board member gave up his seat on the House Science committee, but remains on the Veterans Affairs committee. Takano becomes the fifth Californian on the committee, joining Republicans Buck McKeon and Duncan Hunter and Democrats George Miller and Susan Davis. However, McKeon and Miller, both former committee chairs, have announced their retirements at the end of this year.

Obama Releases 2015 Budget Plan
March 25th, 2014

On March 4, the White House released the President’s FY 2015 budget. While generally adhering to the spending caps included in the two-year budget deal negotiated by Congress last December, the proposed budget blueprint is accompanied by a “budget sidecar,” called the Opportunity, Security and Growth Initiative, which proposes an additional $56 billion in spending, split evenly between defense and non-defense discretionary funding, and generally paid for through tax code changes. The budget also proposes to permanently repeal sequester caps starting in FY 2016 and replace them with a balanced package of deficit reduction.

Under the administration’s FY 2015 budget, discretionary funding for the Department of Education would be $69 billion, which represents a 2 percent increase from FY 2014. Most postsecondary education programs would be level-funded from the amount received in FY 2014.

Of particular interest to the CSU, Pell Grant program funding would be sufficient to allow for a scheduled increase in the maximum grant to a projected $5,830, up from $5,730 in FY 2014. The administration would also tighten satisfactory academic progress requirements for Pell recipients in as yet unspecified ways, and re-establish a pathway for students to receive Pell without first receiving a high school diploma or GED.

Supplemental Educational Opportunity Grants (SEOG) and Federal Work-Study would receive $733.1 million and $974.7 million respectively, the same as FY 2014. Also receiving level funding are early outreach and completion programs, including GEAR UP ($301.6 million) and TRIO ($638.3 million).

In recent years, several programs that assist minority-serving institutions (MSIs) have received a mix of mandatory and discretionary funds. With regard to discretionary money, funding for Asian American and Native American Pacific Islander-Serving Institutions (AANAPISIs) and Hispanic-Serving Institutions (HSIs) would remain stable from FY 2014. However, mandatory funding for AANAPISIs and for the HSI STEM program would increase slightly, while mandatory funding for postbaccalaureate HSI programs would expire as scheduled on September 30, resulting in a net marginal increase for AANAPISI programs to $8 million (from $7.7 million), and net decrease for HSI programs to $207.4 million (from $210.9 million). Also of interest to the MSI community, FIPSE’s “First in the World” competition, which had been funded at $75 million in FY 2014, would be increased to $100 million, with $75 million reserved for a new competitive grant program for MSIs to undertake innovative and cost-saving strategies to improve student outcomes.

As in past years, the administration proposes to eliminate Teacher Quality Partnership (TQP) grants, and use the funding as part of a larger teacher and School Leader Pathway program. International education programs would see a small boost, from $72.1 million in FY 2014 to $76.2 million in FY 2015, with funds designated for visits and studies in foreign countries.

With respect to other agencies and programs of interest, AmeriCorps would be flat-funded at $335.4 million. While NSF overall would see a slight increase in funding, the Robert Noyce Teacher Scholarship and the Louis Stokes Alliance for Minority Participation (LSAMP) programs would both continue to receive funding at the FY 2014 levels of $60.89 million and $45.62 million respectively. Within the U.S. Department of Agriculture, Hispanic Serving Institution Education Partnerships would be level-funded at $9.2 million, while the Capacity Building for Non-Land Grant Colleges of Agriculture (NLGCA) program, which received $4.5 million for FY 2014, would see its funding eliminated. And, as in past years, the administration budget proposes $10 million for a new endowment fund for Hispanic-Serving Agricultural Colleges and Universities (HSACUs), though the program has never been funded by Congress. On the tax side, itemized income tax deductions, including the current deduction for charitable giving, would see their value reduced for upper-income earners, while the American Opportunity Tax Credit (AOTC), currently set to expire in 2017, would become a permanent feature of the tax code.

Also outlined in the President’s FY 2015 budget is a new State Higher Education Performance Fund, which would provide $4 billion in competitive mandatory funding over four years, to be matched on a one-to-one basis by recipients, for states to support, reform, and improve the performance of their higher education systems similar to “Race to the Top” for elementary and secondary education. The budget would include an additional $7 billion over ten years for a new “College Opportunity and Graduation Bonus,” to reward colleges that successfully enroll and graduate a significant number of low-income students on time, and $52 million in new funds for design and implementation of the administration’s planned college rating system. However, given that lawmakers in both parties agreed to overall spending caps for FY 2015 just last December, it is highly unlikely that Congress will be willing to increase domestic spending, even accompanied by offsets, in order to fund new initiatives. The Senate has already indicated that it is unwilling to consider a 2015 budget resolution, and House budgeteers are also encountering resistance to doing so. Earlier this month, the CSU joined more than one thousand associations and institutions in urging House and Senate appropriators to restore funding for education, health, and labor programs to pre-sequester levels.

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Last Updated: June 16, 2014