July 2005

1. Fiscal Year 2006 Budget and Appropriations
2. Higher Education Act Reauthorization

Fiscal Year 2006 Budget and Appropriations

The House and Senate have both been very active in moving forward with appropriations legislation for Fiscal Year 2006. The House of Representatives completed action on the FY06 Labor/Health and Human Services/Education Appropriations bill on June 24, 2005, passing the bill by a vote of 250 to 151.

The Senate has also completed Committee action on its version of the Labor/HHS/Education appropriations bill but action on the Senate floor is not likely until after work is completed on the nomination of John Roberts to the Supreme Court. Judiciary Chairman Arlen Specter is also Chairman of the Labor/HHS/Education Appropriations Subcommittee in the Senate and he will be focused on the nomination for much of September. The bill included an overall appropriation for National and Community Service programs of $546.2 billion, an increase of $4.7 million over Fiscal Year 2005. Of this amount, $42.6 million is designated for Learn and Serve (same as FY05) and $280 million for AmeriCorps State and National grants (a decrease of $7 million from FY05), and $55 million for AmeriCorps National Direct Grants. VISTA is funded at $96.4 million, an increase of $2.2 million over FY05.

Higher Education Act Reauthorization

The House Education and the Workforce Committee has completed consideration of H.R. 609, the College Access and Opportunity Act, which reauthorizes most of the Higher Education Act including teacher preparation, institutional assistance, and student financial assistance programs. Read the text of the bill and amendments that were offered at the mark-up.

H.R. 609 makes some significant changes to the Higher Education Act. Major provisions include:

• Authorizes a new “Pell Grants Plus” program, allowing low-income students who take college-preparatory courses in high school an additional $1,000 in Pell Grants during their first two years of college.
• Increases the loan limit for first-year college students to $3,500 (up from $2,625) and for second-year students to $4,500 (up from $3,500).
• Repeals the Pell Grant “tuition sensitivity” requirement, which limits aid to students at low-cost institutions.
• Reduces loan origination fees from 4 percent to 1 percent over a five-year period.
• Adds proprietary institutions to the definition of an institution of higher education, qualifying them for federal funds from certain programs.
• Creates a “watch list” that would identify institutions that raise tuition and fees an excessive amount (more than twice the rate of inflation over a three-year period).
• Prohibits the Department of Education from creating a national database with personal, individually identifiable data about all students enrolled in postsecondary education.

The bill also makes a major change to the way campus-based aid is distributed to institutions. Under current law, campus-based aid funds (Perkins, SEOG and Work Study) are allocated to institutions of higher education based on a formula called “base guarantee,” which distributes funds to institutions based on the length of time they have been in the program, guaranteeing that schools get the same amount of money they have received for nearly 30 years, and not based on the number of needy students the institution serves. H.R. 609 would phase out the base guarantee formula (a reduction of 20% every two years until 2016) and reallocate the funds to institutions based on a “fair share” formula that distributes funds based on factors such as tuition/fees and number of needy students.

Cassidy & Associates is a government relations firm located in Washington D.C. For more information on Cassidy and its services, contact Lisa Bos at 202/585-2885 or lbos {at} cassidy(.)com