Order Code IB10097
CRS Issue Brief for Congress
Received through the CRS Web
The Higher Education Act:
Reauthorization Status and Issues
Updated October 2, 2003
James B. Stedman
Domestic Social Policy Division
Congressional Research Service ˜ The Library of Congress

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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
Postsecondary Student Population
Student Loan Programs
Pell Grant Program
Campus-Based Student Financial Aid Programs
Student Support Services
Minority Institutions
Teacher Quality and Quantity
Institutional Participation in the HEA
Other HEA Programs and Provisions
Federal Tax Benefits for Postsecondary Education

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The Higher Education Act: Reauthorization Status and Issues
SUMMARY
The funding authorizations for programs
ED’s FY2003 appropriation legislation
in the Higher Education Act (HEA) will
includes over $15 billion for HEA discretion-
expire during the 108th Congress. This legis-
ary authorities. A majority of these discretion-
lation, administered by the U.S. Department of
ary funds are expected to be awarded to stu-
Education (ED), authorizes the federal govern-
dents in the form of Pell Grants — over $11
ment’s major student aid programs, as well as
billion is appropriated for these grants. The
other significant initiatives. Legislative action
discretionary total excludes mandatory federal
on the reauthorization has begun. On July 9,
expenditures for the Federal Family Education
2003, the House passed the first in a series of
Loan (FFEL) and Direct Loan (DL) programs
bills which Committee members plan to move
through which estimated student and parent
to reauthorize the HEA. The first legislation
borrowing was over $40 billion in new loans
approved addresses HEA provisions related to
in FY2002 and $44 billion in FY2003.
preparation of K-12 teachers. On September
25, 2003, the House Education and the
During the reauthorization process, the
Workforce Committee approved separate bills
Congress may consider a wide variety of
amending and reauthorizing the international
issues. Among these are the following:
education and graduate support titles of the
HEA.
! effectiveness of the HEA pro-
grams in increasing post-
Postsecondary education is a complex,
secondary access;
decentralized enterprise, made up of a wide
! impact on HEA student aid
array of institutions enrolling a large and
programs of the growth in
diverse student body. In academic year 2000-
federal tax benefits for post-
2001, approximately 6,600 degree- and non-
secondary expenses;
degree-granting postsecondary education
! measures to hold institutions
institutions were eligible to participate in the
accountable for educational
HEA’s student aid programs. These institu-
outcomes;
tions enrolled an estimated 15.9 million stu-
! college prices and the appro-
dents in the fall of 2000.
priate federal role in
addressing increases; and
HEA programs and activities fall primar-
! impact of the growth in post-
ily into four main categories:
secondary distance education.
! student financial aid,
The Congress may also address issues
! services to help students com-
specific to individual HEA programs, includ-
plete high school and enter
ing the HEA’s major sources of postsecondary
and succeed in college,
education support (Pell Grants and
! aid to institutions, and
FFELs/DLs). Among potential Pell issues, the
! aid to improve K-12 teacher
Congress may address shortfalls in Pell fund-
training at postsecondary in-
ing. Issues for FFELs/DLs may include
stitutions.
whether current loan limits should be raised,
and whether the current framework of FFELs
and DLs should be maintained or modified.
Congressional Research Service ˜ The Library of Congress

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MOST RECENT DEVELOPMENTS
On July 9, 2003, the House passed legislation to amend and reauthorize Title II of the
Higher Education Act (H.R. 2211, Ready to Teach Act of 2003), as well as legislation to
expand student loan forgiveness under the Higher Education Act (HEA) for borrowers who
are math, science, special education, or reading teachers in low-income schools (H.R. 438,
Teacher Recruitment and Retention Act). On September 25, 2003, the House Education and
the Workforce Committee approved separate bills amending and reauthorizing the graduate
education programs and international education programs of the HEA (H.R. 3076, Graduate
Opportunities in Higher Education Act of 2003; H.R. 3077, International Studies in Higher
Education Act of 2003). Relevant bills are described in the Legislation section of this issue
brief.
BACKGROUND AND ANALYSIS
Introduction
The funding authorizations for programs in the 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.
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.
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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 FY2003 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 over $40
billion in new loans (excluding consolidation loans) in FY2002 and an estimated $44 billion
in FY2003. 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
! 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
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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 $55 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 for FY2002 excludes nearly $32 billion in Stafford Loan
consolidations (new loans issued to consolidate existing loans). Data presented here and
below on total spending and numbers of students aided under HEA Title IV student aid
programs are primarily drawn from the U.S. Department of Education’s FY2004 Budget
Summary (available at [http://www.ed.gov/offices/OUS/Budget04/04summary/index.html])
and budget tables prepared by the U.S. Department of Education’s Budget Service (available
at [http://www.ed.gov/offices/OUS/budget.html]).
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 estimated to have assisted 4.8 million students with $11.7 billion for
FY2002. The FY2003 program costs are estimated at $12.5 billion. 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
$28.6 billion was borrowed in 7.3 million loans; for FY2003, the estimated figures are $31.5
billion in 7.9 million new loans (consolidation loans are excluded from these totals). 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 $11.7 billion in 2.9 million DLs was borrowed; the FY2003 estimates are 12.8
billion in 3.1 million new loans (consolidation loans are excluded).
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 went to more than 1.2 million students; an
estimated 1.1 million students earned over $1.2 billion in the Federal Work-Study program;
and an estimated 707,000 students borrowed approximately $1.3 billion in Perkins Loans.
The FY2003 appropriations levels for these programs are $760 million for SEOGs, $1 billion
for Federal Work-Study, and $166.4 million for Perkins Loans (these and other FY2003
appropriations levels cited in this issue brief reflect ED’s estimates of the impact of the
across-the-board reduction required by the FY2003 appropriations legislation). It should be
noted that institutional matching funds and repayments on Perkins Loans generate levels of
actual assistance that exceed the annual appropriations for these programs.
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
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provide need-based state grant programs. There is an FY2003 appropriation of $66.6 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
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.)
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 872,000 individuals
participated in the various TRIO programs which received $802.5 million in that year. The
FY2003 appropriation is $827.1 million. GEAR UP is expected to have served an estimated
1.2 million students with its FY2002 funding of $285 million. The FY2003 appropriation
is $293.1 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; the FY2003 appropriation is $388.9 million. Title V authorizes financial
support for Hispanic-Serving institutions; its FY2002 funding is $86 million and FY2003
funding is $92.4 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
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Preparing Tomorrow’s Teachers to Use Technology. The FY2003 appropriation levels are
$89.4 million and $62.1 million respectively.
Possible Issues for Reauthorization
Legislative action on reauthorizing the HEA has begun. For example, as noted earlier,
the House approved on July 9, 2003, two bills addressing K-12 teacher preparation and
recruitment in the HEA. These and other bills on which there has been action are described
in the separate Legislation section below.
This present section briefly discusses some of the major topics and issues within those
topics that might be debated in the reauthorization process in general. These include:
! 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.)
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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:
! 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 (what students and
their families are charged and what they pay) 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
Department has issued a series of reports on college costs and financing, including Study of
College Costs and Prices, 1988-1989 to 1997-1998 (December 2001), and What Students
Pay for College: Changes in Net Price of College Attendance Between 1992-93 and 1999-
2000 (September 2002). In addition, the Bureau of Labor Statistics is to develop a higher
education “market basket” that identifies the items that make up college costs.
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The Congress may debate what new steps might be appropriate and necessary to address
concerns about affordability. It may consider such issues as:
! whether current data are adequate to delineate the actual extent and causes
of an affordability problem;
! whether the federal government should take a direct role in limiting
institutions’ price increases or in rewarding institutions that limit increases;
and
! whether the state funding role and its consequences for public tuition levels
should be addressed in some fashion.
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
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.
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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
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.
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During this 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.
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
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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.) ED has made
a regulatory change to address the week of instructional time issue (Federal Register,
November 1, 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.
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;
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! 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
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 was $4,000, with
estimated program costs for that year in excess of $11.6 billion. The FY2003 appropriations
legislation set the maximum grant at $4,050; estimated programs costs are about $11.7
billion.
During the reauthorization process, the Congress may debate a variety of Pell Grant-
related issues. Of immediate interest to the Congress is the issue of shortfalls in the program.
The FY2002 appropriation for the program proved inadequate to support a $4,000 maximum
Pell Grant because a substantial portion of the increase in FY2002 appropriated funds over
FY2001 funds was used to make up a shortfall in FY2001 funding for the program, and
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because program costs for FY2002 rose. FY2002 supplemental appropriations legislation
(P.L. 107-206) included $1 billion to help meet this Pell Grant shortfall. But following the
enactment of that supplemental, FY2002 cost estimates rose still further. Based on the $11.3
billion appropriation for FY2002 (including the $1 billion supplemental), estimated FY2002
program costs of about $11.7 billion, and an over $900 million shortfall from FY2001 funded
with FY2002 appropriated funds, the estimated FY2002 shortfall is almost $1.4 billion. The
shortfall from FY2002 carried over into FY2003. The estimated current year shortfall for
FY2003 is over $2.5 billion. The FY2003 estimated program costs are approximately $12.5
billion; the annual appropriation is $11.4 billion.
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. Some may propose making these grants into
entitlements as a way of addressing the recurrent shortfalls.
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 identifies and briefly describes legislation proposing reauthorization of the
HEA or major components of the HEA on which there has been legislative action (at least
markup at the subcommittee level).
H.R. 438 (Wilson, SC)
Teacher Recruitment and Retention Act. Amends HEA Title IV provisions regarding
forgiveness of FFELs and DLs for K-12 teachers in low-income schools to expand the
amount that can be forgiven to $17,500 for math, science, special education, and reading
teachers, and to accelerate the rate at which loans for these teachers can be forgiven.
Introduced January 29, 2003 and referred to the House Education and the Workforce
Committee. Reported on June 26, 2003 (H.Rept. 108-182). Passed by the House on July 9,
2003.
H.R. 2211 (Gingrey)
Ready to Teach Act of 2003. Amends and reauthorizes Title II of the HEA through
FY2008. The bill maintains the basic structure of the Teacher Quality Enhancement Grants
(Title II, Part A) and focuses its programs on the preparation and recruitment of highly
qualified teachers as defined by the No Child Left Behind Act of 2001. Among other
amendments to Title II, Part A, the bill permits states to receive grants more than once,
redefines a high need school district, increases the emphasis on the recruiting of minorities
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to K-12 teaching, somewhat expands the activities related to preparing teachers to use
technology, includes provisions regarding teachers’ impact on student achievement, and
broadens the pool of students for which teacher preparation programs must calculate the rates
at which their students pass initial certification exams. The bill extends the Preparing
Tomorrow’s Teachers to Use Technology (Title II, Part B) with only minor amendments.
The bill adds a Centers of Excellence program (Title II, Part C) for teacher preparation
programs at designated minority serving higher education institutions. Introduced May 22,
2003, and referred to the House Committee on Education and the Workforce. Reported on
June 26, 2003 (H.Rept. 108-183). Passed by the House on July 9, 2003.
H.R. 3076 (Hoekstra)
Graduate Opportunities in Higher Education Act of 2003. Amends and extends,
through FY2009, various programs under HEA Title VII supporting graduate education as
well as projects to improve postsecondary education. The programs reauthorized include the
Javits Fellowship program, the Graduate Assistance in Areas of National Need program, the
Thurgood Marshall Legal Educational Opportunity program, the Fund for the Improvement
of Postsecondary Education, and the Demonstration Projects to Ensure Students with
Disabilities Receive a Quality Higher Education. Among changes made to these programs
are the addition of a priority under the Graduate Assistance in Areas of National Need
program for preparing faculty who can train students to be highly qualified math, science,
and special education K-12 teachers as well as teachers of limited English proficient
students. Introduced September 11, 2003, and referred to the House Committee on
Education and the Workforce. Approved by the Committee on September 25, 2003.
H.R. 3077 (Hoekstra)
International Studies in Higher Education Act of 2003. Amends and extends, through
FY2009, various programs under HEA Title VI supporting international education. Among
the programs reauthorized are the International and Foreign Language Studies programs,
Business and International Education programs, and programs administered by the Institute
for International Public Policy. Among amendments to this title, the bill adds authority for
an International Higher Education Advisory Board, an independent entity in the U.S.
Department of Education, to provide advice and make recommendations to the U.S.
Congress and the Department on international higher education issues. Among other
amendments, the bill also adds language requiring any higher education institution receiving
funds under this title to provide recruiters from agencies of the federal government
reasonable access to its campus for recruiting purposes. Introduced September 11, 2003, and
referred to the House Committee on Education and the Workforce. Approved by the
Committee on September 25, 2003.
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.
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Postsecondary Student Population
CRS Report RL31441, The Postsecondary Education Student Population, by James B.
Stedman and Jeffrey J. Kuenzi.
CRS Report RS21435, High School Completion and Postsecondary Enrollment Among First
Generation and Low-Income Students, by Jeffrey J. Kuenzi and Charmaine Jackson.
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.
CRS Report RL31575, Consolidation Loan Provisions in the Federal Family Education
Loan and Direct Loan Programs, 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.
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.
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.
CRS Report RL31882, Teacher Quality Enhancement Grants (Title II, Part A of the Higher
Education Act): Overview and Reauthorization Issues, by James B. Stedman, Jeffrey
J. Kuenzi, and Bonnie F. Mangan.
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CRS Report RL32050, Teacher Recruitment and Retention: Current Programs and
Legislation in the 108th Congress, by Jeffrey J. Kuenzi.
Institutional Participation in the HEA
CRS Report RL31926, Institutional Eligibility for Participation in Title IV Student Aid
Programs Under the Higher Education Act: Background and Issues, by Rebecca R.
Skinner.
CRS Congressional Distribution Memorandum, Reporting Requirements Applicable to
Institutions of Higher Education Under the Higher Education Act, by David P. Smole,
et al.
Other HEA Programs and Provisions
CRS Report RS21436, Graduate Fellowship Programs Under Title VII of the Higher
Education Act (HEA): Background and Reauthorization, by Bonnie Mangan.
CRS Report RL31625, Foreign Language and International Studies: Federal Aid Under
Title VI of the Higher Education Act, by Wayne C. Riddle.
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.
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