Order Code IB10097
CRS Issue Brief for Congress
Received through the CRS Web
The Higher Education Act:
Reauthorization Status and Issues
Updated October 20, 2004
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
Cost of College
Student Aid
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 in the Higher
ED’s FY2004 appropriation legislation
Education Act (HEA) have expired. This
included over $16 billion for HEA discretion-
legislation, administered by the U.S. Depart-
ary authorities. A majority of these discretion-
ment of Education (ED), authorized the fed-
ary funds are expected to be awarded to stu-
eral government’s major student aid programs,
dents in the form of Pell Grants — over $12
as well as other significant initiatives. Provi-
billion is appropriated for these grants. The
sions temporarily extending the programs and
discretionary total excludes mandatory federal
activities of the HEA were signed into law as
expenditures for the Federal Family Education
part of a continuing resolution (P.L. 108-309)
Loan (FFEL) and Direct Loan (DL) programs
funding federal programs through November
through which students and parents will
20, 2004. On October 6, 2004, the House
borrow an estimated $52 billion in FY2004.
passed H.R. 5185 to extend the HEA authori-
ties through FY2005. The Senate passed the
During the reauthorization process, the
same legislation on October 9, 2004. In the
Congress has considered a wide variety of
108th Congress, legislative action to reauthori-
issues. Among these are the following:
ze the HEA has included House passage of a
series of bills amending and extending several
! college prices and the appro-
individual titles of the HEA.
priate federal role in
addressing increases
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-
! measures to hold institutions
2001, approximately 6,600 degree- and non-
accountable for educational
degree-granting postsecondary education
outcomes;
institutions were eligible to participate in the
! the process of determining
HEA’s student aid programs. These institu-
students’ need for financial
tions enrolled an estimated 15.9 million stu-
aid; and
dents in the fall of 2000.
! impact of the growth in post-
secondary distance education.
HEA programs and activities fall primar-
ily into four main categories:
The Congress also has considered issues
specific to individual HEA programs, includ-
! student financial aid,
ing the HEA’s major sources of postsecondary
! services to help students com-
education support (Pell Grants and
plete high school and enter
FFELs/DLs). Among Pell issues is the short-
and succeed in college,
fall in Pell funding. Issues for FFELs/DLs
! aid to institutions, and
include whether current loan limits should be
! aid to improve K-12 teacher
raised, and whether the current framework of
training at postsecondary in-
FFELs and DLs should be modified.
stitutions.
Congressional Research Service ˜ The Library of Congress

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MOST RECENT DEVELOPMENTS
On September 30, 2004, the President signed into law a continuing resolution (P.L. 108-
309) funding federal programs through November 20, 2004. Included in this legislation is
language specifying that the programs, activities, eligibility requirements, and advisory
committees in the Higher Education Act (HEA) authorized through FY2004 continue
through the duration of the continuing resolution. On October 6, 2004, the House passed
H.R. 5185 (Higher Education Extension Act of 2004) to extend the programs and activities
of the HEA through FY2005. On October 9, 2004, the Senate passed the same legislation
without amendment.
BACKGROUND AND ANALYSIS
Introduction
The funding authorizations in the HEA have expired. A continuing resolution has
extended the programs, activities, eligibility requirements, and advisory committees of the
HEA through November 20, 2004. An extension through FY2005 has been approved by the
House (H.R. 5185). The HEA legislation, whose programs are administered by the U.S.
Department of Education (ED), includes 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 some 63% of all federal (excluding education tax credits),
state, and institutional aid awarded to postsecondary education students in 2002-2003. (The
College Board, Trends in Student Aid, 2003.) 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 that have been, or may 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.
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
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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 programs and activities of the HEA fall primarily into one of 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 FY2004 appropriation legislation
included over $16 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 $52 billion in
new loans in FY2004 (these new loans exclude consolidation loans issued to consolidate
existing loans).
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 included in 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 FY2004 are estimated to support
nearly $69 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 Stafford Loan consolidations. 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 FY2005 Budget Summary
(available at [http://www.ed.gov/about/overview/budget/budget05/summary/index.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 be assisting 5.1 million students with $12.7 billion for
FY2003 and will assist an estimated 5.3 million students with $13.1 billion for FY2004.
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 FY2003, the
estimated amount borrowed was $33.8 billion in 8.4 million new loans (consolidation loans
are excluded from these totals). For FY2004, the volume that will be lent is estimated to be
$39 billion (9.6 million new 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 FY2003, an estimated $12 billion in 2.9 million new DLs were
borrowed (consolidation loans are excluded). For FY2004, the estimated new volume is
$13.2 billion (3.1 million new loans).
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. The
FY2004 appropriations levels for these programs are: $770.5 million for SEOGs, $998.5
million for Federal Work-Study, and $165.4 million for Perkins Loans. Total aid available
to students under these programs for FY2004 is estimated at $975 million in SEOG
assistance (1.3 million students), $1.2 billion in Federal Work-Study earnings (858,000
students), and $1.3 billion in Perkins Loans (673,000 students). It should be noted that for
the Perkins program, in addition to institutional matching funds, repayments on loans
generate additional resources that are lent under the program.
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. An FY2004 appropriation of $66.2 million for this
program is estimated to support $169 million in total aid (169,000 recipients). This total
reflects just the amounts supported through state matching requirements.
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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 210% during the decade from academic year 1992-1993 to
academic year 2002-2003, while the combined grant aid from the Pell Grant, SEOG, and
LEAP programs grew by about 83% and Work-Study earnings by 56%. In 1992-1993, 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 2002-2003, the relative balance was 78%
loans, 20% grants, and 2% earnings. (See The College Board, Trends in Student Aid 2003.)
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
included in 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. The FY2004 appropriation is $832.6 million. For
FY2002 an estimated 872,000 individuals participated in the various TRIO programs which
received $802.5 million in that year. For GEAR UP, the FY2004 appropriation is $298.2
million. The program is estimated to have served about 1.2 million students with its FY2002
funding of $285 million.
Institutional Aid
The primary institutional assistance programs are those in Title III and V. Both titles
award grants to higher education institutions to strengthen their academic, administrative,
and financial capacities. Title III includes provisions for 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 directs support
for capital financing of HBCUs, and improvement of science and engineering programs at
predominantly minority institutions. The total FY2004 appropriation for Title III is $400
million. Title V authorizes financial support for Hispanic-Serving institutions; its FY2004
funding is $94 million.
Preservice Teacher Training
HEA Title II is the source of grants for improving teacher education programs,
strengthening teacher recruitment efforts, and training prospective teachers to utilize
technology (this last activity is no longer being funded). This title also establishes reporting
requirements for states and higher education institutions regarding the quality of teacher
education programs. The FY2004 appropriation for the Teacher Quality Enhancement grants
is $88.9 million.
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Possible Issues for Reauthorization
Legislative action on reauthorizing the HEA began in the 108th Congress. The bills on
which there has been legislative action (at least committee markup) are described in the
separate Legislation section below. This present section briefly discusses some of the major
topics and issues within those topics that are being, or may 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
At issue is 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 three 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 2000, 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 (77% compared to 50%). In that same year, the participation rate of
whites was 11 percentage points higher than that for blacks (66% compared to 55%) and 13
percentage points higher than that for Hispanics (66% compared to 53%). (These are ED
estimates based on census data — Condition of Education 2002. The Hispanic data should
be used with caution given small sample sizes in the census data.)
Of interest to 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 has considered, among other questions:
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! 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 should be simplified to encourage needy
students to pursue 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. 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. (Background and data on college costs and prices are provided
in CRS Report RL32100, College Costs and Prices: Background and Issues for
Reauthorization of the Higher Education Act.)
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 was 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 was to develop a higher
education “market basket” that identifies the items that make up college costs (the market
basket has not been developed).
The Congress has debated what new steps might be appropriate and necessary to address
concerns about affordability. It has considered such issues as:
! whether current data are adequate to delineate the actual extent and causes
of an affordability problem;
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! 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 2001 show that in that tax year 7.3 million returns
claimed $5.2 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, substantial amounts of federal financial
assistance for postsecondary education are available 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 has shown interest in 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
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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.
One question is 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, there has been interest in the use of alternative
accountability measures more directly tied to educational outcomes. These 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 has debated 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 this reauthorization the Congress has considered 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
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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.
As noted earlier, there is concern about the complexity of the financial aid application
process. As part of an effort to simplify the process, attention is being paid to changes in
how the financial contribution from students and their families toward postsecondary
expenses is calculated.
Another issue 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 2000-2001, over half (56%) of two- and four-year postsecondary
institutions offered courses using distance education. A significant portion (about 12%) of
all postsecondary institutions were planning to begin to do so over the next three years. (U.S.
Department of Education, Distance Education at Postsecondary Education Institutions:
2000-2001.)
This growing use of 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
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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.
The Congress is revisiting these provisions during the reauthorization process. Among
the issues before it are the following:
! 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.
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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 being considered during the reauthorization process touch on myriad aspects of
the loan programs. The Congress is debating 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 has also
addressed 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.
During the reauthorization process, the Congress has considered a variety of Pell Grant-
related issues. Of immediate interest to the Congress is the issue of shortfalls in the program.
The FY2004 appropriation of over $12 billion for the program is intended to support a
$4,050 maximum grant, but program costs for FY2004 are estimated to be $13.1 billion.
Further, annual appropriations in recent years have fallen short of program costs. The result
is an estimated shortfall in FY2004 of $3.7 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 attracting attention during the reauthorization is whether the
program would more successfully promote access if its assistance were targeted to the first
two years of enrollment, covering 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 debate the relative balance among the various forms of
federal student assistance awarded under the HEA and the tax system. As noted earlier, the
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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).
P.L. 108-309 (H.J.Res. 107 — Young, FL)
Legislation making continuing appropriations for FY2005 and for other purposes. This
legislation funds federal programs through November 20, 2004. It includes language
specifying that the programs, activities, eligibility requirements, and advisory committees in
the HEA authorized through FY2004 will continue through the duration of this continuing
resolution. Passed by the House and Senate on September 29, 2004. Signed into law on
September 30, 2004.
H.R. 438 (Wilson, SC)
Teacher Recruitment and Retention Act. Amends HEA Title IV provisions regarding
forgiveness of Stafford Loans 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. Passed 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 recruiting minorities to K-12
teaching, somewhat expands 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. Passed 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
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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. Passed the House under suspension on October 21, 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 an
International Higher Education Advisory Board, an independent entity in the 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
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. Passed the House under suspension on October 21, 2003.
H.R. 4409 (Gingrey)
Teacher Training Enhancement Act. Amends and reauthorizes HEA Title II. The
legislation is nearly identical to H.R. 2211, see above. Passed the House under suspension
on June 2, 2004. Text added to H.R. 444 as passed the House on June 3, 2004.
H.R. 4411 (Burns)
Priorities for Graduate Studies Act of 2004. Amends and reauthorizes HEA Title VII.
The legislation is nearly identical to H.R. 3076, see above. Passed the House under
suspension on June 2, 2004. Text added to H.R. 444 as passed the House on June 3, 2004.
H.R. 5185 (Boehner)
Higher Education Extension Act of 2004. Extends the programs in the HEA through
FY2005. Among other provisions, also extends required or permitted activities under the
HEA, as well as, advisory committees and other entities. Passed the House under suspension
on October 6, 2004. Passed Senate without amendment on October 9, 2004.
H.R. 5186 (Boehner)
Taxpayer-Teacher Protection Act of 2004. Amends the HEA to reduce temporarily
special allowance payments for certain loans under the Stafford Loan program. Amends
HEA Title IV provisions regarding forgiveness of Stafford Loans for K-12 teachers in low-
income schools to expand the amount that can be forgiven to $17,500 for math, science, and
special education teachers. Expanded amounts are available only for those who were new
borrowers between October 1, 1998 and October 1, 2005. Passed the House under
suspension on October 7, 2004. Passed Senate without amendment on October 9, 2004.
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FOR ADDITIONAL READING
Prior Reauthorization
CRS Report RL30063, The Higher Education Act: Reauthorization by the 105th Congress,
coordinated by James B. Stedman.
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.
Cost of College
CRS Report RL32100, College Costs and Prices: Background and Issues for
Reauthorization of the Higher Education Act, by Rebecca R. Skinner.
Student Aid
CRS Report RL32083, Federal Student Aid Need Analysis: Background and Selected
Simplification Issues, by Adam Stoll and James B. Stedman.
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.
CRS Report RL31668, Federal Pell Grant Program of the Higher Education Act:
Background and Reauthorization, by James B. Stedman.
CRS Report RL31618, Campus-Based Student Financial Aid Programs Under the Higher
Education Act, by David P. Smole.
CRS Report RS21824, Student Eligibility: Drug Convictions and Federal Financial Aid,
by Charmaine Jackson and Laura Monagle.
CRS Report RS21785, Federal Pell Grants for Prisoners, by Charmaine Jackson.
Student Support Services
CRS Report RL31622, TRIO and GEAR UP Programs: Status and Issues, by Jeffrey J.
Kuenzi.
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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.
CRS Report RS21760, Student Loan Cohort Default Rates: Exemptions for Certain
Minority Serving Institutions, by Charmaine Jackson.
CRS Report RL32396, Federal Funding of Programs for Minority-Serving Institutions of
Higher Education, 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.
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 Jeffrey J. Kuenzi and Wayne C. Riddle.
CRS Report RL32098, The Office of Federal Student Aid: The Federal Government’s First
Performance-Based Organization, by Charmaine Jackson.
CRS Report RS21653, Fund for the Improvement of Postsecondary Education: Background
and Funding, by Bonnie F. Mangan.
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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CRS Report RL32155, Tax-Favored Higher Education Savings Benefits and Their
Relationship to Traditional Federal Student Aid, by Linda Levine and James B.
Stedman.
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