As amended in 1998, the Higher Education Act (HEA) of 1965 authorizes several programs dealing with student financial aid, aid to institutions, aid to improve K-12 teacher training at postsecondary institutions, and services to help students complete high school and to enter and succeed in postsecondary education.
Legislative Outlook
Reauthorization of the Higher Education Act is being considered through a two-track process in the House and Senate. Congress passed, and the President signed into law, a reconciliation bill, the College Cost Reduction Act of 2007 (PL 110-84), that alters the mandatory spending frameworks associated with student loans and Pell grants. The reconciliation bill provides a $20 billion increase in college aid programs over the next five years by cutting federal subsidies to the student loan industry. Those cuts enable the maximum Pell grant to increase to $5,400 from the current $4,310 by 2012, while also cutting interest rates on federally backed student loans to poor and middle-class students from 6.8 percent to 3.4 percent over the next four years.
The authorization bill covering HEA programs is still pending in Congress. The Senate approved an authorization bill (S.1642) in July, and the House Education and Labor Committee approved a bill in mid-November, but the measure has not reached the House floor. The House bill, which is similar to the Senate measure, is designed to pressure colleges into reining in tuition costs, streamline the student loan process, and crack down on deals between lenders and schools. Under the House bill, colleges would have to report their reasons for tuition increases and plans for lowering student costs. Incentives, such as additional need-based aid, would be provided to students. The reauthorization bill also calls for the creation of a simplified two-page application form for low-income students and would require lenders to provide students with full disclosure of their borrowing options, including those in the federal and private student loan markets.
