Order Code IB10097
Issue Brief for Congress
Received through the CRS Web
The Higher Education Act:
Reauthorization Status and Issues
Updated December 23, 2002
James B. Stedman
Domestic Social Policy Division
Congressional Research Service ˜ The Library of Congress

---

CONTENTS
SUMMARY
MOST RECENT DEVELOPMENTS
BACKGROUND AND ANALYSIS
Introduction
Postsecondary Education Overview
Summary of the HEA
Student Aid
Student Support Services
Institutional Aid
Preservice Teacher Training
Possible Issues for Reauthorization
Access to Postsecondary Education
College Costs and Prices
Federal Tax Benefits
Standards and Accountability
Need Analysis
Distance Education
Teacher Quality and Quantity
Student Loans
Pell Grants
LEGISLATION
FOR ADDITIONAL READING
Prior Reauthorization
Student Loan Programs
Pell Grant Program
Campus-Based Student Financial Aid Programs
Federal Tax Benefits for Postsecondary Education
Distance Education
Teacher Quality and Quantity
Student Support Services
Minority Institutions
International Education

---

IB10097
12-23-02
The Higher Education Act: Reauthorization Status and Issues
SUMMARY
The funding authorizations for programs
students and their parents are estimated to
in the Higher Education Act (HEA) will
borrow nearly $38 billion in new loans this
expire during the 108th Congress. This legis-
year.
lation, administered by the U.S. Department of
Education (ED), authorizes the federal govern-
During the reauthorization process, the
ment’s major student aid programs, as well as
Congress may consider a wide variety of
other significant initiatives.
issues. Among these are the following:
Postsecondary education is a complex,
! effectiveness of the HEA pro-
decentralized enterprise, made up of a wide
grams in increasing post-
array of institutions enrolling a large and
secondary access;
diverse student body. In academic year 2000-
! impact on HEA student aid
2001, approximately 6,600 degree- and non-
programs of the growth in
degree-granting postsecondary education
federal tax benefits for post-
institutions were eligible to participate in the
secondary expenses;
HEA’s student aid programs. These institu-
! measures that might be used
tions enrolled an estimated 15.9 million stu-
to hold participating institu-
dents in the fall of 2000.
tions accountable for educa-
tional outcomes;
HEA programs and activities fall primar-
! factors influencing college
ily into four main categories:
prices and the appropriate
federal role, if any, in
! student financial aid,
addressing price increases;
! services to help students com-
and
plete high school and enter
! impact of the growth in post-
and succeed in postsecondary
secondary distance education.
education,
! aid to institutions, and
In addition, the Congress may address
! aid to improve K-12 teacher
issues specific to individual HEA programs.
training at postsecondary in-
For the HEA’s major sources of postsecondary
stitutions.
education support — Pell Grants and
FFELs/DLs, these issues may include the
ED’s FY2002 appropriation legislation
following. Among potential Pell issues, the
includes over $15 billion for HEA discretion-
Congress may consider targeting Pells to the
ary authorities. A majority of these discretion-
first 2 years of enrollment to reduce reliance
ary funds are expected to be awarded to stu-
on loans in those years. Issues for FFELs/DLs
dents in the form of Pell Grants — over $11
may include whether current loan limits
billion. The discretionary total excludes
should be raised, and whether the current
mandatory federal expenditures for the Fed-
framework of FFELs and DLs should be
eral Family Education Loan (FFEL) and
maintained or modified.
Direct Loan (DL) programs through which
Congressional Research Service ˜ The Library of Congress

---

IB10097
12-23-02
MOST RECENT DEVELOPMENTS
On February 8, 2002, S. 1762 was signed into law as P.L. 107-139. This legislation
amends the Higher Education Act by extending the interest rate structure currently in effect
for federal student loans through June 2006, and repealing a replacement interest rate
structure scheduled to take effect on July 1, 2003. This legislation also changes the interest
rate charged to borrowers on new loans, as of July 1, 2006, from a variable rate based on
market conditions to a fixed rate of 6.8% for student borrowers and 7.9% for parent
borrowers.
On July 16, 2002, the House failed to approve H.R. 4866 (Fed Up Higher Education
Technical Amendments of 2002) under suspension of the rules. This legislation makes a
series of technical amendments to the Higher Education Act, many stemming from
recommendations submitted to the House 21st Century Competitiveness Subcommittee by the
higher education community regarding regulatory impediments that limit access to federal
student aid.
FY2002 supplemental appropriations legislation (P.L. 107-206), as signed into law on
August 2, 2002, includes $1 billion to help meet a shortfall in the Pell Grant program.
BACKGROUND AND ANALYSIS
Introduction
The funding authorizations for programs in the Higher Education Act (HEA) will expire
during the 108th Congress (current authorizations are provided through FY2003 with an
automatic 1-year extension for FY2004 under the General Education Provisions Act). This
legislation, whose programs are administered by the U.S. Department of Education (ED),
authorizes the federal government’s major student aid programs, as well as other significant
programs such as those providing aid to special groups of higher education institutions and
support services to enable disadvantaged students to complete secondary school and enter
and complete college. Although important support from outside of the HEA flows to
postsecondary education institutions through multiple federal agencies for activities such as
research and development, the federal presence in postsecondary education is shaped to a
significant degree by the HEA. For example, HEA student aid programs constituted fully
64% of all federal (excluding education tax credits), state, and institutional aid awarded to
postsecondary education students in 2001-2002. (The College Board, Trends in Student Aid,
2002.) The HEA was last reauthorized by the Higher Education Amendments of 1998 (P.L.
105-244).
This issue brief provides the following: an overview of postsecondary education
(institutions and students), an overview of the HEA with a focus on its most significant
programs and provisions, and a discussion of major issues likely to be of interest to the
Congress during the HEA reauthorization process.
CRS-1

---

IB10097
12-23-02
Postsecondary Education Overview
Postsecondary education is a complex, decentralized enterprise, made up of a wide array
of different kinds of institutions enrolling a large and diverse student body.
In academic year 2000-2001, there were about 6,600 degree- and non-degree-granting
postsecondary education institutions that participated in the HEA’s student aid programs.
These institutions were divided roughly evenly among the public sector (33%), private
nonprofit sector (30%), and private for-profit (proprietary) sector (37%). An estimated 15.9
million students were enrolled overall in undergraduate and graduate programs in those
institutions in the fall of 2000. In contrast to the roughly even split in institutions by sector,
a substantial majority of all students were enrolled in public institutions (75%), a fifth (20%)
attended private nonprofit institutions, and a small percentage (5%) were enrolled in
proprietary institutions. The differences between the distributions of institutions and students
are the result of substantially smaller average enrollments in private nonprofit and private
proprietary institutions (estimated 1,600 and 285, respectively) compared to public
institutions (estimated 5,500). (These data are derived from the U.S. Department of
Education’s Integrated Postsecondary Education Data System. These enrollment figures
differ from those derived from other sources including the Bureau of the Census’ Current
Population Survey and the Department of Education’s National Postsecondary Student Aid
Study. In particular, data from the latter source will be higher because they measure
enrollment throughout the academic year, not just at a point in time.)
Since the enactment of the HEA in 1965, important characteristics of postsecondary
students have changed substantially. There is greater racial and ethnic diversity in the
student population. In 1965, 94% of students were white; by 2000, that percentage had fallen
to 78%. Gender distribution has shifted markedly as well. In 1965, 38% of all students were
women; by 2000, that share had risen to 55%. (These data are from the Current Population
Survey. For further analysis of these data, see CRS Report RL31441, The Postsecondary
Education Student Population.)
Summary of the HEA
The HEA authorizes programs and activities most of which fall into four main
categories: student financial aid, support services to help students complete high school and
enter and succeed in postsecondary education, aid to strengthen institutions, and aid to
improve K-12 teacher training at postsecondary institutions. ED’s FY2002 appropriation
legislation includes over $15 billion for HEA discretionary authorities. This total excludes
mandatory federal expenditures for the Federal Family Education Loans (FFELs) and Direct
Loans (DLs) through which students and their parents are estimated to secure nearly $38
billion in new loans (excluding consolidation loans). Over two-thirds of the annual loan
volume consists of capital provided by private lenders who receive federal subsidies and
guarantees.
There are seven titles in the HEA:
! Title I — General Provisions
CRS-2

---

IB10097
12-23-02
! Title II — Teacher Quality Enhancement Grants
! Title III — Institutional Aid
! Title IV — Student Assistance
! Title V — Developing Institutions
! Title VI — International Education Programs
! Title VII — Graduate and Postsecondary Improvement Programs
Student Aid
At the heart of the HEA are the student aid programs authorized under Title IV that
provide grant aid (which does not have to be repaid), loans, and work-study assistance.
These programs seek to expand educational opportunity and for FY2002 are estimated to
support more than $52 billion in student assistance. This cumulative total amount of student
aid includes directly appropriated federal funds, student loan volume in the FFEL/DL
programs, and institutional matching funds required under several of the federal student aid
programs. This cumulative total excludes about $17 billion in Stafford Loan consolidations
(new loans issued to consolidate existing loans). (Unless noted, data presented here and
below on total spending and numbers of students aided under HEA Title IV student aid
programs are from the U.S. Department of Education’s FY2003 Budget Summary.)
The largest Title IV student aid programs are the Pell Grant program, and the FFEL and
DL programs. Under each, students receive funds to attend the postsecondary education
institutions of their choice. Pell Grants are need-based aid for undergraduate students. These
grants are currently expected to assist 4.6 million students with $11.2 billion for FY2002.
FFELs are made by private lenders and are available to undergraduate and graduate students,
and their parents. Some kinds of FFELs are need-based, others are not. For FY2002, it is
estimated that some $26.5 billion will be borrowed in 6.8 million loans. The DL program
provides the same kinds of loans as the FFEL program, but the loan capital is provided
directly by the federal government; participating postsecondary institutions or contractors act
as loan originators on behalf of the federal government. For FY2002, an estimated $11.4
billion in 2.8 million DLs will be borrowed.
Three smaller Title IV student aid programs — Federal Supplemental Educational
Opportunity Grants (SEOG), Federal Work-Study, and Federal Perkins Loans — are
collectively known as the campus-based programs because their funds are allocated to
postsecondary institutions for award to students. Institutions must match a portion of their
allocation under each of these programs. Undergraduates can participate in each of these
programs, while graduate students are eligible for Work-Study and Perkins Loans. For
FY2002, an estimated $918 million in SEOGs will go to more than 1.2 million students; an
estimated 970,000 students will earn over $1.2 billion in the Federal Work-Study program;
and an estimated 715,000 students will borrow approximately $1.2 billion in Perkins Loans.
Among other Title IV student aid programs is the Leveraging Educational Assistance
Partnership (LEAP) program which provides matching funds to states to encourage them to
provide need-based state grant programs. There was an FY2002 appropriation of $67 million
for this program.
The relative balance among the various kinds of federal student aid has shifted over
time. According to estimates from The College Board, the aggregate annual amount
CRS-3

---

IB10097
12-23-02
borrowed under the FFEL, DL, and Perkins programs (DLs were first made in the 1994-1995
academic year) rose by some 185% during the decade from academic year 1991-1992 to
academic year 2001-2002, while the combined grant aid from the Pell Grant and
Supplemental Educational Opportunity programs grew by about 69% and Work-Study
earnings by 60%. In 1991-1992, of the aggregate aid available from these grant, loan, and
work programs, 68% came in the form of loans, 29% as grants, and 3% as earnings. By
2001-2002, the relative balance was 78% loans, 20% grants, and 2% earnings. (See The
College Board, Trends in Student Aid 2002.) Based on the estimates in ED’s FY2003 Budget
Summary, the distribution for FY2002 for these same programs was 75% loans, 22% grants,
and 2% earnings, reflecting a slight increase in the grant share and decrease in that of loans.
Student Support Services
The HEA’s primary programs for student services are the federal TRIO programs and
the Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR UP), both
authorized by HEA Title IV. In general, these programs provide disadvantaged students with
support services to help them complete high school, and enter and persist in college. The
TRIO programs (so called because there were once just three of them) include Talent Search,
Upward Bound, Student Support Services, Educational Opportunity Centers, McNair
Postbaccalaureate, and Staff Training. For FY2002 an estimated 823,000 individuals will
participate in the various TRIO programs which received $802.5 million in that year. GEAR
UP is expected to serve an estimated 1.2 million students with its FY2002 funding of $285
million.
Institutional Aid
The primary institutional assistance programs are those authorized under Title III and
V. Both titles award grants to higher education institutions to strengthen their academic,
administrative, and financial capacities. Title III authorizes financial assistance to select
groups of institutions, including tribal colleges, Alaska Native- and Native Hawaiian-Serving
institutions, and historically black colleges and universities (HBCUs). It also authorizes
support for capital financing of HBCUs, and improvement of science and engineering
programs at predominantly minority institutions. The total FY2002 appropriation for Title
III is $361 million. Title V authorizes financial support for Hispanic-Serving institutions;
its FY2002 funding is $86 million.
Preservice Teacher Training
HEA Title II authorizes grants for improving teacher education programs, strengthening
teacher recruitment efforts, and training prospective teachers to utilize technology. This title
also establishes reporting requirements for states and higher education institutions regarding
the quality of teacher education programs. The FY2002 appropriation for these programs
included $90 million for the Teacher Quality Enhancement grants and $62.5 million for
Preparing Tomorrow’s Teachers to Use Technology. (For further information, see CRS
Report RL31254, Pass Rates as an Accountability Measure for Teacher Education
Programs.)
CRS-4

---

IB10097
12-23-02
Possible Issues for Reauthorization
Although program authorizations in the HEA do not expire until FY2004, there is
growing interest in the U.S. Congress in the issues that might be considered during the
reauthorization process. This section identifies and briefly discusses several of the major
topics and issues within those topics that might be debated in the reauthorization process, as
well as issues that might arise for the HEA’s major sources of postsecondary education
support — Pell Grants and FFELs/DLs:
! access to postsecondary education,
! college costs and prices,
! federal tax benefits,
! standards and accountability,
! need analysis,
! distance education,
! teacher quality and quantity,
! student loans, and
! Pell Grants.
Interwoven through many of these subjects are issues relating to the enrollment in
substantial numbers of non-traditional students, i.e., older students and those not enrolled
on a full-time basis, as well as the relative balance in available HEA student aid among
loans, grants, and work.
Access to Postsecondary Education
The Congress is likely to consider whether the HEA’s array of student aid programs,
student support service programs, and institutional aid programs are effective at increasing
access to postsecondary education, particularly for low-income and minority students.
Increasing access to postsecondary education is a primary objective of the HEA.
Despite substantial gains in overall participation in postsecondary education over the
past 3 decades, individuals from low-income families (bottom 20% of all family incomes)
and several minority groups remain significantly less likely to participate in postsecondary
education than other individuals. In 1999, the rate at which high school graduates from high-
income families (top 20% of all family incomes) enrolled in college in the fall following their
graduation was about 27 percentage points greater than that for low-income individuals (76%
compared to 49%). In that same year, the participation rate of whites was 7 percentage
points higher than that for blacks (66% compared to 59%) and 21 percentage points higher
than that for Hispanics (66% compared to 42%). (These are ED estimates based on census
data — Condition of Education 2001. The Hispanic data should be used with caution given
small sample sizes in the census data.)
At issue for the Congress is whether the current HEA programs adequately promote the
traditional HEA goal of expanding access to postsecondary education for disadvantaged
individuals. The Congress may consider, among other questions:
CRS-5

---

IB10097
12-23-02
! whether the federal investment in student aid may have had an adverse
impact on access by leading to increases in college prices (see separate issue
on college costs and prices below);
! whether the predominance of loans in the available HEA student aid has
adverse consequences for access, particularly for low-income students who
may not wish to incur large levels of debt;
! whether the process of applying for current student aid programs is
unreasonably complicated and likely to discourage needy students from
securing aid;
! whether the current student support services programs — TRIO and GEAR
UP — are adequate to their task and whether they may be excessively and
inefficiently duplicative of each other;
! whether the federal government’s growing support of non-need-based aid
(such as Hope Scholarships) has come at the expense of need-based
resources and what consequences this may have had on access; and
! whether HEA programs are sufficiently attentive to the access issue for the
population of non-traditional students that make up a sizeable portion of
student enrollment.
College Costs and Prices
Increases in college prices (what students and their families have to pay) that exceed the
growth in inflation and in family income have fueled interest in college affordability for low-
and middle-income families. Between 1991-1992 and 2001-2002, average tuition and fees
(after being adjusted for inflation) grew by 37% in private 4-year institutions and 38% in
public 4-year institutions. These increases outstripped the 8% growth in inflation-adjusted
median family income over that same period. (These data come from The College Board’s
Trends in College Pricing, 2002. The median income considered is for families with a
family head aged 45 to 54.) Further, there is increasing concern that state budget constraints
are leading to reductions in funding for public higher education and, potentially, increases
in tuition and fees.
The Higher Education Amendments of 1998 sought to improve the quality of
information reported by ED regarding postsecondary education prices and costs (the costs
incurred by institutions to operate and provide instruction). The Department is also required
to undertake a study and issue a final report by September 30, 2002, on expenditures at
higher education institutions, including analysis of the relationship between certain
expenditures and college prices. The final report in “Phase 1" of the Department’s response
to this legislative requirement was published December 2001 (Study of College Costs and
Prices, 1988-1989 to 1997-1998). In addition, the Bureau of Labor Statistics is to develop
a higher education “market basket” that identifies the items that make up college costs.
Federal Tax Benefits
In recent years, new federal income tax benefits have been created to help students and
their families meet postsecondary education expenses. These have provided tax credits or
deductions for expenses already incurred — the Hope Scholarship tax credits, the Lifetime
Learning tax credit, and a tax deduction for postsecondary education expenses. Taxpayers
are also able to receive federal income tax benefits for savings for college through Coverdell
CRS-6

---

IB10097
12-23-02
education savings accounts, qualified tuition programs, and education savings bonds. These
tax provisions are a significant source of support for students and their families. Preliminary
data from the Internal Revenue Service for 2000 show that in that tax year 6.9 million returns
claimed $4.9 billion in education tax credits. These benefits are not need-based and appear
to primarily aid middle- and upper-middle income families.
With the introduction of these tax benefits, individuals can now receive substantial
amounts of federal financial assistance for postsecondary education from two parallel
systems — the federal income tax system; and the traditional student aid delivery system
which provides aid such as grants, loans, or work opportunities.
The Congress may address various issues that arise from providing resources through
two systems and from the intersection of these resources in the need analysis process.
Among these issues are:
! whether the increasing federal investment in tax-based benefits
disproportionately assists middle- and upper middle-income students and
families at the expense of investment in traditional student aid targeting low-
income students and families;
! how the need analysis process should reflect the availability of tax resources
in its determination of students’ eligibility for traditional student aid and the
level of such aid;
! whether providing substantial amounts of assistance through two systems
(traditional student aid and tax system) has made the process of financing
postsecondary education expenses unduly complicated;
! whether the targeting and levels of HEA student aid should be modified
given the expansion of non-need-based aid through the federal income tax
system; and
! whether the tax benefits are more or less likely to contribute to increases in
college prices than are traditional student aid programs, particularly those
that are need-based.
Standards and Accountability
For much of the history of the HEA, standard-setting and accountability efforts have
focused primarily on ensuring that participating institutions are acting properly in their
administration of HEA institutional and student aid funds. Among the indicators followed
closely have been incidents of fraud and abuse by postsecondary institutions and, more
recently, default rates by student loan borrowers. Continued participation in Title IV student
aid programs is contingent upon institutions’ default rates. Although concern about
mismanagement of HEA funds remains substantial, there is increasing interest in the
Congress in holding higher education institutions that are benefitting from billions of dollars
in federal funding accountable for the educational outcomes of their students.
The Congress may consider whether default rates are a reasonable and effective measure
to hold institutions accountable for educational outcomes. It may be argued that default rates
will rise at institutions that fail to educate their students because such students will not be
able to enter successfully the world of work and repay their student loan obligations.
Nevertheless, it may also be asserted that this is at best an indirect measure of the success of
CRS-7

---

IB10097
12-23-02
institutions in educating their students, and that it may have a particularly negative impact
on institutions serving disadvantaged student populations.
In lieu of, or in addition to, default rates, the Congress may debate use of alternative
accountability measures more directly tied to educational outcomes. These may include the
rates at which students complete their programs of study, or the rates at which program
graduates secure professional licensing or certification. The HEA already embraces pass
rates on professional licensing exams as an accountability measure for teacher education
programs at higher education institutions (see discussion below of Teacher Quality and
Quantity).
The appropriateness of different accountability measures may be affected by changes
in the demographics of postsecondary education students. For example, are the relevant
outcomes measures different for non-traditional students than they are for traditional
students, given potential differences in such areas as educational objectives between these
two groups of students?
In addition, the Congress may consider the roles being played by states, accrediting
agencies, and ED in determining eligibility for HEA program funds. The Congress may
debate how effective these various entities have been in addressing issues of educational
quality and whether changes should be made.
Need Analysis
The federal need analysis system delineated in HEA Title IV is the basis upon which
students’ eligibility for, and level of, Title IV student aid is determined. The key element in
the system is the determination of a student’s expected family contribution (EFC), that is,
how much the student and his or her family is expected to contribute from income and other
resources toward the price of postsecondary education. In past reauthorizations, elements
of the need analysis system, particularly the determination of the EFC, have been subject to
debate and amendment.
During the upcoming reauthorization the Congress may debate whether the need
analysis system appropriately and adequately gauges students’ ability to contribute toward
their education. This may be particularly important given the recent growth in federal tax-
based support to meet college expenses. These include tax provisions to reimburse families
for college expenditures (e.g., federal Hope and Lifetime Learning tax credits) and to
promote college savings (e.g., federal tax incentives for Qualified Tuition Plans). One of the
key questions is how the need analysis system should take these tax-based resources into
account in determining what families can be expected to contribute toward college expenses.
Another issue that may be debated is how well the premises and process of federal need
analysis serve non-traditional students. For example, some of these students may be seeking
assistance for sporadic course-taking to bolster their economic opportunities, and may not
enroll in degree- or certificate-granting programs, making them ineligible for any Title IV
student aid, or they may enroll on less than a half-time basis, making them ineligible for Title
IV loans.
CRS-8

---

IB10097
12-23-02
Related to the process of determining eligibility and need for federal student aid is the
packaging of federal and non-federal aid that is the purview of financial aid officers on
postsecondary campuses across the country. Packaging policies have been at issue for
several federal programs, including the GEAR UP program, which attempt to provide “last
dollar” aid to students. These dollars are intended to be awarded to eligible students in
addition to all other federal and non-federal aid for which they are eligible. Institutions have
raised concern that federal efforts in this area inappropriately intrude on their discretion to
package their institutions’ own aid as well as other aid that may be designated as “last dollar”
aid. The packaging interaction of veterans’ education benefits and educational benefits
provided for community service through AmeriCorps, for example, with HEA Title IV aid
may also be at issue during the reauthorization process.
Distance Education
Postsecondary education institutions are increasingly delivering instruction using
telecommunications technology that links learners and teachers in different locations and at
different times. In 1997-1998, roughly one-third of 2- and 4-year postsecondary institutions
offered courses using distance education. A significant portion (about 20%) of
postsecondary institutions were planning to do so over the next 3 years. (U.S. Department
of Education, Distance Education at Postsecondary Education Institutions: 1997-98,
December 1999.)
This growing use of, and interest in, distance education has raised substantial issues for
HEA Title IV student aid programs. It is bringing into question the application of provisions
previously enacted to address abuses of student aid by various correspondence schools. It
is also challenging traditional definitions of what constitutes a student, a program, and the
measures of student engagement in postsecondary instructions.
The federally established Web-based Education Commission reported in December,
2000, that certain HEA provisions unduly restricted the legitimate growth of distance
learning, limiting access to postsecondary education. The Commission recommended that
the U.S. Congress consider several relatively technical changes to the HEA intended to
remove limits on the extent to which postsecondary institutions can engage in distance
learning and remain eligible for Title IV student aid programs. It also proposed regulatory
changes in how a week of instructional time in Title IV-eligible nontraditional terms is
defined because this definition is difficult for distance education enrollees to meet. In the
107th Congress, legislation to address these issues (H.R. 1992) was passed by the House but
not the Senate. (See, CRS Congressional Distribution Memorandum, “H.R. 1992/S. 1445,
Internet Equity and Education Act,” by Margot A. Schenet, January 29, 2002.)
The Higher Education Amendments of 1998 authorized the Secretary of Education to
choose a group of institutions at which various student aid statutory and regulatory
provisions could be waived to promote the expansion of distance learning at those
institutions. Annual evaluation reports are required from the Secretary.
Results from these evaluations and the demonstration sites are likely to be considered
by the Congress as it debates what HEA statutory changes may be appropriate to
accommodate the delivery of instruction through telecommunications while safeguarding
federal student aid dollars.
CRS-9

---

IB10097
12-23-02
Teacher Quality and Quantity
As amended in 1998, the HEA authorizes several programs intended to improve the
quality of training and preparation that prospective K-12 teachers receive from teacher
education programs at the postsecondary level. The Congress acted out of concern that the
quality of the K-12 teaching force was a critical element in the successful implementation
of federal initiatives to raise the academic performance of K-12 students.
A significant step taken by the 1998 amendments was to require states and higher
education institutions to report on various attributes of teacher preparation programs,
including the rates at which recent graduates passed initial teacher licensing exams. The
amendments also required states to implement a process that identifies teacher education
programs as low-performing. If a state’s designation of a program as low-performing leads
to the withdrawal of state approval or termination of state funding, then the HEA provisions
trigger a loss of the institution’s federal funds for professional development and the
ineligibility of teacher education students for Title IV student aid at that institution.
Critical components of these requirements are only just now being completed. For
example, the first annual report from states concerning the performance of their teacher
education programs and their procedures for identifying low-performing programs was
required in the fall of 2001. A report from the Secretary of Education on these state actions
was issued June, 2002. (See CRS Report RL31254, Pass Rates as an Accountability
Measure for Teacher Education Programs.)
The Congress is likely to revisit these provisions during the reauthorization process.
It may consider:
! what impact, if any, these provisions may have had;
! whether any assessment of the merits of these provisions is premature;
! whether the emphasis on pass rates is appropriate and likely to prompt
institutions and states to strengthen their teacher preparation programs or
whether pass rates are an inadequate gauge of quality and potentially a
deleterious one raising barriers for programs that prepare minority students
for teaching; and
! whether federal requirements should be strengthened to improve the quality
of data reported, comparability across institutions and states, and raise the
consequences for poor performance.
Student Loans
As already delineated, the HEA student loan programs are responsible for a substantial
portion of the federally supported aid currently available to postsecondary students.
Recently, the 107th Congress approved legislation to modify the HEA by extending the
existing student loan interest rate structure through June, 2006, and installing fixed rates for
borrowers thereafter.
Issues likely to be considered during the reauthorization process touch on myriad
aspects of the loan programs. The Congress may debate whether to continue or to modify
the current framework of providing federally subsidized loans whose principal is non-federal
CRS-10

---

IB10097
12-23-02
capital (FFELs) while concurrently lending federal funds directly (Direct Loans). It may also
address such issues as:
! whether the levels of debt being incurred by students through the federal
programs are having negative effects on access to postsecondary education,
persistence, and career choices;
! whether current annual and cumulative limits on what individual students
can borrow from these programs should be raised to reflect rising college
prices and help students avoid utilizing more expensive non-federal loans,
or whether such action will fuel price increases and burden students with too
much debt;
! whether federal loans are too expensive and various costs, such as loan
origination fees, should be adjusted; and
! whether a desirable balance is being struck between loans and gift aid
(grants and tax benefits) for various groups of borrowers.
Pell Grants
The Pell Grant program is the foundation of the student aid provided by the HEA. The
maximum grant for FY2002 specified in the appropriations process is $4,000. Estimated
program costs for that year are in excess of $11.2 billion.
During the reauthorization process, the Congress may debate a variety of Pell Grant-
related issues. Of immediate interest to the Congress has been the prospect that the FY2002
appropriation for the program is inadequate to support a $4,000 maximum Pell Grant because
a substantial portion of the increase in FY2002 appropriated funds over FY2001 funds will
be used to make up a shortfall in FY2001 funding for the program. Further, estimated
program costs for FY2002 have been rising. FY2002 supplemental appropriations legislation
(P.L. 107-206) included $1 billion to help meet this Pell Grant shortfall. The shortfall
situation may influence action taken during the upcoming reauthorization. For example, the
HEA no longer has statutory provisions allowing the Secretary of Education to reduce awards
in order to address shortfalls; such language was deleted from the HEA by the Higher
Education Amendments of 1992.
Among other issues that may attract legislative attention during the reauthorization is
whether the program would more successfully promote access if its assistance were limited
to the first 2 years of enrollment and covered a more substantial portion of college expenses
(so-called front loading with Pell Grants), thereby reducing reliance on loans in these early
years of enrollment. Also, the Congress may consider the relative balance among the various
forms of federal student assistance awarded under the HEA and the tax system. As noted
earlier, the share of HEA Title IV aid provided in the form of grants is markedly less than
the loan volume and, overall, has declined since the early 1990s.
LEGISLATION
This section will track legislation that proposes reauthorization of the HEA or its major
components. To date, such legislation has not been introduced.
CRS-11

---

IB10097
12-23-02
FOR ADDITIONAL READING
Selected CRS products are listed here by general topic.
Prior Reauthorization
CRS Report RL30063, The Higher Education Act: Reauthorization by the 105th Congress,
coordinated by James B. Stedman.
Student Loan Programs
CRS Report RL30048, Federal Student Loans: Program Data and Default Statistics, by
Adam Stoll.
CRS Report RL30655, Federal Student Loans: Terms and Conditions for Borrowers, by
Adam Stoll.
CRS Report RL30880, The Role the Federal Student Loan Programs Play in Supporting
Postsecondary Students, by Adam Stoll.
CRS Report RL30656, The Administration of Federal Student Loan Programs: Background
and Provisions, by Adam Stoll.
Pell Grant Program
CRS Report RL31668, Federal Pell Grant Program of the Higher Education Act:
Background and Reauthorization, by James B. Stedman.
Campus-Based Student Financial Aid Programs
CRS Report RL31618, Campus-Based Student Financial Aid Programs Under the Higher
Education Act, by David P. Smole.
Federal Tax Benefits for Postsecondary Education
CRS Report RL31484, Higher Education Tax Credits: Targeting, Value, and Interaction
with Other Federal Student Aid, by Adam Stoll and James B. Stedman.
CRS Report RL31129, Higher Education Tax Credits and Deduction: An Overview of the
Benefits and Their Relationship to Traditional Student Aid, by Adam Stoll and James B.
Stedman.
CRS Report RL31214, Saving for College Through Qualified Tuition (Section 529)
Programs, by Linda Levine.
Distance Education
CRS Congressional Distribution Memorandum, H.R. 1992/S. 1445, Internet Equity and
Education Act, by Margot A. Schenet. January 29, 2002.
CRS-12

---

IB10097
12-23-02
Teacher Quality and Quantity
CRS Report RL31254, Pass Rates as an Accountability Measure for Teacher Education
Programs, by James B. Stedman and Bonnie F. Mangan.
Student Support Services
CRS Report RL31622, TRIO and GEAR UP Programs: Status and Issues by Jeffrey J.
Kuenzi.
Minority Institutions
CRS Report RL31647, Reauthorization of Title III and Title V of the Higher Education Act:
Issues for the 108th Congress, by Charmaine Jackson.
International Education
CRS Report RL31625, Foreign Language and International Studies: Federal Aid Under
Title VI of the Higher Education Act, by Wayne C. Riddle.
CRS-13

---