Order Code RL31618 CRS Report for Congress Received through the CRS Web Campus-Based Student Financial Aid Programs Under the Higher Education Act Updated January 24, 2006 David P. Smole Specialist in Social Legislation Domestic Social Policy Division Congressional Research Service ˜ The Library of Congress Campus-Based Student Financial Aid Programs Under the Higher Education Act Summary Three Higher Education Act (HEA) programs — The Federal Supplemental Educational Opportunity Grant (FSEOG) program, Federal Work-Study (FWS) program, and Federal Perkins Loan program — collectively are referred to as the campus-based programs. Funding authorization for the campus-based and other HEA programs was extended through March 31, 2006 under the Second Higher Education Extension Act of 2005 (P.L. 109-150). Reauthorization of the HEA, including the campus-based programs, is being considered by the 109th Congress. Under the campus-based programs, federal funding is provided to institutions of higher education for the provision of need-based financial aid to students. Institutions participating in the programs are required to provide a match of approximately one-third of the federal funds they receive. The campus-based programs are unique among the need-based federal student aid programs in that the mix and amount of aid awarded to students is determined by each institution’s financial aid administrator according to institution-specific award criteria (which must be consistent with federal program requirements), rather than according to nondiscretionary award criteria, such as that applicable for Pell Grants and subsidized Stafford Loans. Each program provides students with a distinct type of aid. The FSEOG program provides grant aid only to undergraduate students. The FWS program provides undergraduate, graduate, and professional students the opportunity for paid employment in a field related to their course of study or in community service. The Perkins Loan program provides low-interest loans with favorable terms and conditions to undergraduate, graduate, and professional students. Funding is provided to institutions separately for each program according to formulas that take into account both the allocation institutions received in years past (their base guarantee) and their proportionate share of eligible students’ need that is in excess of their base guarantee (their fair share increase). From these funds, institutions’ financial aid administrators award aid to eligible students having financial need. The programs are among the oldest of the federal postsecondary aid programs; however, they now operate amidst a host of other aid programs and tax benefits, some of which are not need-based. At present, a relatively small proportion of all students receive campus-based financial aid. Over the past decade, the number of institutions participating in the programs has also declined. The 109th Congress is considering amending and extending the campus-based programs as it debates reauthorization of the Higher Education Act. This report reviews and analyzes major changes that would be made by H.R. 609, the College Access and Opportunity Act of 2005 (H.Rept. 109-231), and by S. 1614, the Higher Education Amendments of 2005. It will be updated to reflect legislative developments. Contents Current Program Descriptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Federal Supplemental Educational Opportunity Grants . . . . . . . . . . . . . . . . 2 Allocation of Funds to Institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Federal Work-Study Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 FWS Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 FWS Community Service Employment . . . . . . . . . . . . . . . . . . . . . . . . . 6 Job Location and Development Programs . . . . . . . . . . . . . . . . . . . . . . . 7 Federal and Non-Federal Shares of Compensation . . . . . . . . . . . . . . . . 7 Work Colleges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Allocation of Funds to Institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Federal Perkins Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Award Procedures and Terms of Perkins Loans . . . . . . . . . . . . . . . . . 10 Deferment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Forbearance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Loan Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Allocation of Funds to Institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Transfer of Funds Between Campus-Based Programs . . . . . . . . . . . . . . . . . 15 Natural Disaster Student Fairness Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Administrative Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Funding and Program Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Funding for the Campus-Based Programs . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Institutional Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Students Served and Average Aid Amounts . . . . . . . . . . . . . . . . . . . . . . . . 19 FSEOG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 FWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Perkins Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Reauthorization of the Campus-Based Programs . . . . . . . . . . . . . . . . . . . . . . . . 24 H.R. 609 and S. 1614 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Allocation of funds to institutions: FSEOG, FWS, and Perkins Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Optional Allocation of Funds Based on Outcomes of Pell Grant Recipients: FSEOG and FWS . . . . . . . . . . . . . . . . . . . . . . 25 Targeting FSEOG aid to Pell Grant recipients: FSEOG . . . . . . . . . . . 27 Community Service Requirements: FWS . . . . . . . . . . . . . . . . . . . . . . 27 Terms and Conditions of Loans: Perkins Loans . . . . . . . . . . . . . . . . . 28 Transfer of Allotments Between Campus-Based Programs . . . . . . . . . 29 List of Figures Figure 1. Institutions Participating in the Campus-Based Programs: Award Years 1984-1985 through 2005-2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Figure 2. FSEOG: Number of Students Receiving Awards and Average Award Amounts, 1984-1985 through 2003-2004 . . . . . . . . . . . . . . . . . . . . 20 Figure 3. FWS: Number of Students Receiving Awards and Average Award Amounts, 1984-1985 through 2003-2004 . . . . . . . . . . . . . . . . . . . . 21 Figure 4. Perkins Loans: Number of Students Receiving Awards and Average Award Amounts, 1984-1985 through 2003-2004 . . . . . . . . . . . . . 23 List of Tables Table 1. FWS Requirements for Federal Share of Compensation . . . . . . . . . . . . 8 Table 2. Perkins Loan Cancellation Rates by Type of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Table 3. Administrative Cost Allowances for the Campus-Based Programs: Award Year 2003-2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Table 4. Campus-Based Program Funding: FY1999-2006 . . . . . . . . . . . . . . . . 17 Table 6. Number and Percent of Institutions Meeting FWS Community Service (CS) Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Table 7. Perkins and FFEL/DL Cohort Default Rates: 1997-2004 . . . . . . . . . . 23 Campus-Based Student Financial Aid Programs Under the Higher Education Act Three postsecondary student financial aid programs authorized under the Higher Education Act of 1965, as amended (HEA) — the Federal Supplemental Educational Opportunity Grant (FSEOG) program, the Federal Work-Study (FWS) program, and the Federal Perkins Loan program — collectively are referred to as the campus-based programs. The campus-based programs are unique among the need-based federal student aid programs in that federal funds are awarded to institutions according to formulas that take into account past institutional awards and the aggregate financial need of students attending the institutions. The mix and amount of aid students receive is determined by each institution’s financial aid administrator according to institution-specific award criteria, rather than according to non-discretionary award criteria, such as that applicable for Pell Grants and subsidized Stafford Loans.1 The campus-based programs last were amended under the Higher Education Amendments of 1998 (P.L. 105-244) which reauthorized the programs that are part of the HEA. While funding authorization for these programs expired at the end of FY2003, the General Education Provisions Act (GEPA) provided for an automatic one-year extension through FY2004. Funding authorization was further extended through FY2005 under the Higher Education Extension Act of 2004 (P.L. 108-366), and subsequently through December 31, 2005 under the Higher Education Extension Act of 2005 (P.L. 109-81), and through March 31, 2006 under the Second Higher Education Extension Act of 2005 (P.L. 109-150). Reauthorization of the HEA, including the campus-based programs, is being considered during the 109th Congress.2 This report begins by providing a brief description of each of the campus-based programs, including the terms under which financial aid is awarded to students and the procedures under which federal funds are allocated to institutions for that purpose. It then provides historical information on federal funds appropriated for each of the programs and an analysis of the number and types of students served. The report concludes with a discussion of topics that might be of issue as the 109th Congress considers reauthorization of the HEA. 1 Institutions are required to establish written procedures for selecting recipients of campusbased financial aid. These selection procedures must meet the requirements of each campus-based program, and must be kept on file at each institution. Consistent with the availability of funds, institutions must make campus-based aid reasonably available to all eligible students demonstrating financial need. 2 For further information on reauthorization of the HEA, see CRS Report RL33040, The Higher Education Act: Reauthorization Status and Issues, by Adam Stoll. CRS-2 Current Program Descriptions This part of the report provides a description of each of the three HEA campusbased financial aid programs — the FSEOG program, the FWS program, and the Federal Perkins Loan program. Program descriptions explain the purpose of each program and the terms under which aid is provided to students. They also include a brief explanation of how federal funds are allocated to institutions for the purpose of providing aid to students. Federal Supplemental Educational Opportunity Grants The FSEOG program authorizes the Secretary to grant funds to institutions of higher education for the purpose of providing financial assistance to undergraduate students with exceptional financial need to aid them in obtaining the benefits of postsecondary education. The FSEOG program is authorized by Title IV, Part A, Subpart 3 of the HEA. It first was incorporated into the HEA under the Education Amendments of 1972 (P.L. 92-318). Prior to authorization of the FSEOG program, Education Opportunity Grants, authorized under the HEA of 1965 (P.L. 89-329), served a similar purpose. From the funds allotted to them by the Secretary, institutions award FSEOGs to eligible students as part of their financial aid packages. Institutions are required to award FSEOGs first to students with exceptional financial need, according to the HEA need analysis provisions,3 with priority going to students receiving Pell Grants. Institutions may establish categories of students for purposes of packaging FSEOG awards. For example, “categories may be based on class standing, enrollment status, program, date of application, or a combination of factors.”4 Categorization of awards may not be used to arbitrarily deny FSEOG aid to students, for example by establishing a policy of awarding aid on a first-come, first-served basis. FSEOGs consist of a federal share, not to exceed 75% (except if the Secretary determines that a larger share is necessary to further the purpose of the program), and a non-federal share of at least 25%. The non-federal share is required to be funded through the institution’s resources, such as institutional grants and scholarships, tuition or fee waivers, state scholarships, and foundation or other charitable organization funds. ED has determined that all state scholarships and grants can be counted toward meeting the nonfederal share, except for funds provided under the 3 Per HEA Title IV, Subpart F — Need Analysis, a student’s financial need is calculated as the cost of attendance, minus the expected family contribution (EFC) — the amount that a student’s family is expected to contribute toward the student’s education, and minus the estimated financial assistance not received under HEA Title IV (this includes scholarships, grants, loans, veterans’ education benefits (Section 480(c)), national service educational awards, and post-service benefits under Title I of the National and Community Service Act of 1990. 4 U.S. Department of Education, Federal Student Aid Handbook, 2005-2006, vol. 3 — Cal cul at i ng Aw a r d s & P a c k a g i n g , p p . 3 -9 4 t h r o ugh 3-97, at [http://www.ifap.ed.gov/IFAPWebApp/currentSFAHandbooksPag.jsp], visited Jan. 17, 2006. (Hereafter cited as ED, FSA Handbook.) CRS-3 Leveraging Educational Assistance Partnership (LEAP) and the Special Leveraging Educational Assistance Partnership (SLEAP) programs.5 Unlike the other two campus-based programs, students are eligible to receive FSEOGs only during the period required to complete a first undergraduate baccalaureate course of study. The maximum FSEOG award amount per academic year is the lesser of the student’s financial need or $4,000. In the case of a student studying abroad, and if the cost of studying abroad exceeds the cost of studying at the student’s home institution, the FSEOG award may be increased to a maximum of $4,400. The minimum value of an FSEOG award is $100 per year. For students enrolled for less than a full academic year, the value of FSEOG awards are to be proportionately reduced. Institutions are required to award a “reasonable proportion” of FSEOG aid to independent students6 and to those who are enrolled less than fulltime if the institution’s allocation of FSEOG funds was based in part on the financial need of such students. (Students enrolled less than half-time are eligible for aid under each of the campus-based programs.) Students do not repay FSEOGs. Allocation of Funds to Institutions. FSEOG funds are allocated to institutions of higher education according to procedures prescribed in the authorizing statute.7 Institutions first are allocated funds in proportion to the amount they received in previous years, with priority going to institutions that participated in the program in FY1999 or earlier. Next funds are allocated to those institutions that began participating after FY1999, but which are not first- or second-time participants. Following this, funds are allocated to institutions that are first- or second-year participants. Provided that sufficient funds are appropriated, institutions that participated in the FSEOG program in FY1999 or earlier receive 100% of their FY1999 allocation. This is referred to as their base guarantee. Institutions that began participating after FY1999, but which are not first- or second-time participants receive a base guarantee that is the greater of 90% of the amount they received in their second year of participation, or $5,000. Institutions participating in the FSEOG program for their first or second year receive as their base guarantee, the greatest of $5,000, 90% of an amount proportional to that received by comparable institutions, or 90% of what the institution received in its first year of participation. However, if an institution began participating in FSEOG after FY1999 and received a larger allocation in its second year of participation than in its first, it is allocated 90% of the amount it received in its second year of participation. Institutions’ base guarantees are adjusted to be proportional to the ratio of total funds available for the FSEOG program to the 5 ED, FSA Handbook, vol. 6 — Campus-Based Programs, pp. 6-12 through 6-15. 6 An independent student is one who is not considered dependent upon his or her parent’s income for financial aid purposes. 7 The allocation procedures for each of the three campus-based programs are described in more detail in CRS Report RL32775, The Campus-Based Financial Aid Programs: A Review and Analysis of the Allocation of Funds to Institutions and the Distribution of Aid to Students, by David P. Smole. CRS-4 national total of institutions’ base guarantees. This amount is called an institution’s adjusted base guarantee.8 After allocating institutions their adjusted base guarantee, any remaining FSEOG funds are allocated to institutions proportionately according to their eligible amount of need that is in excess of their adjusted base guarantee. An institution’s eligible amount of need, or fair share, is calculated by subtracting the sum of aid provided under the Pell Grant and LEAP/SLEAP programs from the aggregate financial need of the institution’s undergraduate students. Undergraduate student financial need is determined through a formula that takes into account the cost of attendance (COA) at the institution and the expected family contribution (EFC) of a representative sample of students.9 Institutions with a fair share amount of need that is greater than their FSEOG adjusted base guarantee are considered to have an excess eligible amount of need. These institutions receive an allocation in excess of their base guarantee, which is called their fair share increase. Institutions’ total allotments are the sum of their adjusted base guarantee and their total fair share increase.10 Other FSEOG Funding Provisions. Institutions are provided flexibility to carryover up to 10% of their allocation for use in a succeeding fiscal year to carry out the FSEOG program. They also may carry-back funds to make grants to students prior to the beginning of the fiscal year, but after the end of the prior academic year. The Secretary is authorized to reallocate any excess funds returned by institutions. An institution returning more than 10% of its allocation will have its next year’s allocation reduced by the amount returned, unless the Secretary determines it would be contrary to the interest of the program. Finally, the Secretary is authorized under FSEOG to allocate up to 10% of funds appropriated in excess of $700,000,000 for the programs authorized under HEA Title IV, Part A,11 to institutions from which 50% or more of Pell Grant recipients either graduate or transfer to four-year institutions. 8 In instances where total funds available is greater than or equal to the national total of base guarantees, then the base guarantee and the adjusted base guarantee would be equal. 9 ED has calculated a table of EFCs used in the campus-based funding process. The table includes average EFCs within 14 income bands for dependent and independent undergraduates, and for graduate and first professional students. The EFC for students is based on information from the second preceding fiscal year. EFCs from this table, rather than the actual EFCs of students at a particular institution, are entered into the allocation formula. The table of EFCs for the 2005-2006 award year is available from ED at [http://www.ifap.ed.gov/dpcletters/attachments/CB0501AttachmentC.xls], visited Jan. 17, 2006. 10 Institutions may receive both an initial fair share increase and an additional fair share increase, the latter being based on the reallocation of excess funds returned by other institutions (described in the next section). 11 HEA Title IV, Part A — Grants to Students in Attendance at Institutions of Higher Education, includes the following programs: Pell Grants, TRIO, GEAR-UP, Academic Achievement Incentive Scholarships, FSEOG, LEAP, Migrant and Seasonal Farmworker Programs, the Robert C. Byrd Honors Scholarship Program, Child Care Access Means Parents in School, and Learning Anytime Anywhere Partnerships. CRS-5 Federal Work-Study Programs12 The purpose of FWS is to provide part-time employment to undergraduate, graduate, and professional students in need of earnings to pursue their course of study; and to encourage student participation in community service activities. FWS programs are authorized under the HEA at Title IV, Part C. They first were authorized under the Economic Opportunity Act of 1964 (P.L. 88-452) and administered by the U.S. Department of Labor’s Office of Economic Opportunity. In 1968, under P.L. 90-575, authority for the Work-Study Programs was transferred to Title IV of the HEA. An institution’s financial aid administrator is responsible for awarding FWS aid to eligible students. Unlike the FSEOG and Perkins Loan programs in which aid is required to be awarded first to students with exceptional financial need, FWS aid may be provided to any student demonstrating financial need. Awards typically are based on factors such as each student’s financial need, the availability of FWS funds, and whether a student requests FWS employment and is willing to work.13 Students receive their award as compensation for the hours they have worked. Earnings from FWS employment are considered “excludable income” in determining a student’s financial need for the subsequent year. Awards are based on a combination of factors such as a student’s financial need, financial aid available from other sources, the wage rate, and how many hours per week the student can work. There is no maximum award amount. FWS Employment. FWS employment may consist of work for the higher education institution a student attends, for a private non-profit organization, for a federal, state, or local public agency, or for a private for-profit organization. Conditions applicable to all types of FWS employment include that it: (A) will not result in the displacement of employed workers or impair existing contracts for services; (B) will be governed by such conditions of employment as will be appropriate and reasonable in light of such factors as type of work performed, geographical regions, and proficiency of the employee; (C) does not involve the construction, operation, or maintenance of so much of any facility as is used or is to be used for sectarian instruction or as a place for religious worship; and 12 This report covers only FWS programs authorized under Part C of the HEA. The LEAP program provides federal funds that can be used by states to support state work-study programs (see CRS Report RS21183, Leveraging Education Assistance Partnership Program (LEAP): An Overview, by Laura L. Monagle). The Department of Veterans Affairs also administers the Veterans Administration Student Work-Study Allowance Program (VASWSAP) for veterans and eligible persons. Authorization for this program is codified at 38 U.S.C. §§ 3485 and 3537. 13 U.S. Department of Education, Office of the Under Secretary, Planning and Evaluation Service, Postsecondary, Adult, and Vocational Education Division, The National Study of the Operation of the Federal Work-Study Program: Summary Findings from the Student and Institutional Surveys (Washington, D.C., 2000), p. 57. CRS-6 (D) will not pay any wage to students employed ... [through the FWS program] that is less than the current federal minimum wage as mandated by Section 6(a) of the Fair Labor Standards Act of 1938.14 Students working for private for-profit organizations must be employed in jobs that are academically relevant to their pursuits. Furthermore, such students cannot be employed under FWS if they otherwise would have been employed by the organization. Students employed by proprietary institutions that they also attend either must be employed on-campus in jobs that, in addition to the abovementioned requirements, also provide student services directly related to the student’s education; or in community service jobs. Proprietary institutions cannot employ FWS students in jobs that involve the solicitation of other students to attend the institution. Employment by private for-profit organizations must be arranged between the sponsoring institution and the for-profit organization. FWS Community Service Employment. Since FY2000, institutions participating in FWS have been required to use at least 7% of their FWS allocation to compensate students employed in community service jobs, including 100% of any excess FWS funds they receive through reallocation of other institutions’ unspent FWS funds.15 In meeting the 7% requirement, institutions are required to ensure that they are operating at least one tutoring or family literacy project in service to the community. Institutions may use up to 10% of the funds they receive for administrative expenses under section 489 of the HEA for the operation of their FWS community service programs. The HEA defines community service as follows: COMMUNITY SERVICES. — For purposes of this part, the term “community services” means services which are identified by an institution of higher education, through formal or informal consultation with local nonprofit, governmental, and community-based organizations, as designed to improve the quality of life for community residents, particularly low-income individuals, or to solve particular problems related to their needs, including: (1) such fields as health care, child care (including child care services provided on campus that are open and accessible to the community), literacy training, education (including tutorial services), welfare, social services, transportation, housing and neighborhood improvement, public safety, crime prevention and control, recreation, rural development, and community improvement; (2) work in a project, as defined in Section 101(20) of the National and Community Service Act of 1990 (42 U.S.C. § 12511(20)); (3) support services to students with disabilities, including students with disabilities who are enrolled at the institution; and 14 15 HEA, § 443(b)(1) (42 U.S.C. § 2753(b)(1)). From FY1994 through FY1999, institutions were statutorily required to use 5% of their FWS allocation to compensate students employed in community service jobs. CRS-7 (4) activities in which a student serves as a mentor for such purposes as — (A) tutoring; (B) supporting educational and recreational activities; and (C) counseling, including career counseling.16 Tutoring and family literacy projects include those that employ students as reading tutors of children who are of preschool age or who are in elementary school, or in family literacy projects. In many instances, FWS jobs in tutoring and family literacy projects count toward an institution’s 7% community service requirement. However, this may not always be the case. For instance, ED has determined that if FWS students are employed as tutors in an institution’s daycare center and the center is not open and accessible to the community, then the job could not be counted toward satisfying the institution’s 7% community service requirement.17 Job Location and Development Programs. Institutions may use up to the lesser of 10% of their FWS allocation or $50,000 to establish or expand a job location and development program operated either by the institution or jointly with another institution. The program must locate and develop jobs, including community service jobs, for currently enrolled students. Jobs located and developed should be compatible with students’ scheduling needs and compliment their educational and vocational goals. The federal share of funds used to operate the program cannot exceed 80%. Job location and development programs cannot be used to find jobs at the institution, nor should they be used to find jobs for students after graduation. Federal and Non-Federal Shares of Compensation. Under the FWS program, students are compensated with a combination of federal funding and a matching amount provided either by the institution or the employer. The share of compensation that may be provided through federal funding varies according to the type of FWS employment. For most FWS jobs, the maximum federal share of compensation is 75%; however, in certain instances, the federal share may be higher (see Table 1). For employment in the private for-profit sector, the federal share of compensation is limited to 50%. An institution’s matching share of compensation may come from any source (other than FWS), and may be paid in the form of services, such as tuition, room, board, or books provided by the institution. Table 1 highlights the maximum federal share of compensation for the various types of FWS employment. 16 HEA, § 441(c) (42 U.S.C. § 2751(c)). 17 ED, FSA Handbook, vol. 6 — Campus-Based Programs, pp. 6-20 through 6-38, and 6-42. CRS-8 Table 1. FWS Requirements for Federal Share of Compensation Type of FWS employment Maximum federal share Specific requirements FWS — In general 75% General requirement Private non-profit or government agency other than the institution May exceed 75%, but not exceed 90%, consistent with regulations Employer selected for student on case-by-case basis and otherwise would be unable to afford cost of employment; and no more than 10% of the institution’s FWS students are employed in jobs for which the federal share exceeds 75% Regulatory exceptiona 100% Determination by the Secretary that federal share in excess of 75% is necessary to further the purpose of the FWS program Private for-profit sector 50% Employing for-profit organization must provide non-federal share of compensation Tutoring and Literacy Projects 100% Priority given to employment of students in projects funded under the Elementary and Secondary Education Act (ESEA) Work Colleges 50% Separate funding authorization; institution must match dollar-for-dollar with non-federal funds Source: HEA, §§ 443, 444, 447, 448 (42 U.S.C. §§ 2753, 2754, 2756a, 2756b); and ED, FSA Handbook, vol. 6 — Campus-Based Programs, pp. 6-9 through 6-11. a. Applicable for schools designated as eligible schools under the Developing Hispanic Serving Institutions Program, the Strengthening Institutions Program, the American Indian Tribally Controlled Colleges and Universities Program, the Alaska Native and Native Hawaiian-Serving Institutions Program, the Strengthening Historically Black Colleges and Universities Program. Work Colleges. FWS authorizes funding to support comprehensive worklearning programs at select institutions called “work colleges.” Work colleges are institutions that make work-learning an integral part of their educational programs. For an institution to qualify for the Work Colleges program, all resident students must be required by the institution to participate in a work-learning program that is an integral part of its educational philosophy. For purposes of the program, work colleges can only be public or private nonprofit institutions and must have a commitment of service to the community. Activities authorized under the Work Colleges program include those generally authorized under FWS grants, including job location and development. In addition, Work Colleges program funds may be used to provide payments or credits to students participating in work-learning programs, to promote and administer work-learning, and for the study of worklearning programs. Funding for the Work Colleges program is authorized separately from the remainder of the FWS program. Institutions may transfer funds from the FWS and Perkins Loan programs to the Work Colleges program. Allocation of Funds to Institutions. Similar to the FSEOG program, FWS funds are allocated to institutions of higher education according to a statutorily prescribed procedures. Funds first are allocated to institutions based on previous CRS-9 year’s allocations, with priority going to institutions that participated in the program in FY1999. These institutions are eligible to receive 100% of their FY1999 allocation as their base guarantee.18 Institutions that began participating after FY1999, but which are not first- or second-time participants receive a base guarantee that is the greater of 90% of the amount they received in their first year of participation, or $5,000. Institutions participating in the FWS program for their first or second year receive as their base guarantee, the greatest of $5,000, 90% of an amount proportional to that received by comparable institutions, or 90% of what the institution received in its first year of participation. However, if an institution began participating in FWS after FY1999 and received a larger allocation in its second year of participation than in its first, it is allocated 90% of the amount it received in its second year of participation. If sufficient funds are not appropriated, then institutions’ awards are reduced proportionately, resulting in an amount called their adjusted base guarantee. Funds in excess of the amount required to meet institutions’ base guarantee are allocated according to institutions’ proportionate share of excess eligible need. For the FWS program, excess eligible need is the amount by which an institution’s share of self-help need (fair share) exceeds its base guarantee. Self-help need is calculated separately for undergraduate students, and graduate and professional students according to formulas that take into account the cost of attendance at the institution and the approximate EFCs of students attending the institution. Institutions whose grants are based in part on the need of independent students or those attending less than full-time are required to assist these students through FWS employment with a reasonable portion of the FWS grant. The Secretary is authorized to allocate up to 10% of funds appropriated for FWS that are in excess of $700,000,000 to institutions from which 50% or more of Pell Grant recipients either graduate or transfer to fouryear institutions. Institutions are provided flexibility to carryover up to 10% of their FWS funds for use in a succeeding fiscal year to carry out the FWS program. If an institution neither uses funds in the year for which they were granted, nor carries them over to the next fiscal year, the Secretary may, in the next succeeding fiscal year, reallocate them to other institutions within the same state. Up to 10% of an institution’s allocation may be granted by the Secretary for the purpose of making grants to students prior to the beginning of the fiscal year, but after the end of the prior academic year. The Secretary also is required to reallocate any excess funds returned by institutions to eligible institutions that in the previous fiscal year used at least 5% of their FWS allocation to compensate students employed in tutoring in reading or family literacy activities. Reallocated funds must be distributed to such institutions according to their excess eligible need. Institutions returning more than 10% of their allocation may, at the discretion of the Secretary, have their next year’s allocation reduced by the amount returned. 18 This is equal to the sum of its FY1999 (award year 1999-2000) base guarantee, plus its initial award year 1999-2000 pro rata increase, plus the additional FWS funds the institution received from the $17 million set aside for that year. These funds were awarded according to criteria described below, to institutions that certified that they graduated or transferred at least 50% of their Pell Grant recipients. CRS-10 Federal Perkins Loans The Federal Perkins Loan program authorizes the allocation of federal funds to institutions of higher education to assist them in capitalizing revolving loan funds for the purpose of making low-interest loans to students with exceptional financial need. The Federal Perkins Loan program is authorized under the HEA at Title IV, Part E. It supersedes Title II — Loans to Students in Institutions of Higher Education, of the National Defense Education Act of 1958 (P.L. 85-864), which was incorporated into the HEA through the Education Amendments of 1972 (P.L. 92-318). Previously, these loans were known as National Defense Student Loans (Defense Loans) and National Direct Student Loans (NDSLs). Institutions capitalize revolving loan funds created under the Perkins Loan program with a combination of federal and institutional capital contributions (FCCs and ICCs, respectively). Institutions apply to ED for FCC funds which are allocated according to procedures similar to those used for the FSEOG and FWS programs. Each institution’s ICC must be equal to one-third of the FCC. After making loans, institutions recapitalize their loan funds by depositing the principal and interest repaid by students who borrowed under the program, as well as any other charges or earnings associated with the operation of the program. Award Procedures and Terms of Perkins Loans. Institutions are required to establish written selection procedures for awarding Perkins Loans to eligible students and to keep these on file at the institution. Loans must be made reasonably available to all eligible students, to the extent that funds are available, and priority must be given to students with exceptional financial need. Institutions’ selection procedures may include individuals’ willingness to repay the loan. Undergraduate students (including those seeking an additional undergraduate degree, if they are otherwise eligible), and graduate and professional students are eligible to borrow from the institutions they attend under the Perkins Loan program. Students studying abroad in programs approved for academic credit by participating institutions also may receive Perkins Loans. Under the terms of the program, the maximum amount a student may borrow per academic year is $4,000 for undergraduate students, and $6,000 for graduate and professional students. The maximum aggregate amount that a student may borrow is limited to $20,000 in unpaid principal for undergraduate students who have completed two years of study, but who have not completed their baccalaureate degree; $40,000 for graduate and professional students; and $8,000 for any other students. Both the annual and aggregate loan limits may be increased by up to 20% for students studying abroad in approved programs. If the amount of an institution’s FCC is based in part on independent students or those studying less than full-time, then these students must be provided with a reasonable portion of the Perkins Loans made by the institution. Interest on Perkins Loans is fixed at a rate of 5% per year.19 However, no interest accrues prior to a student beginning repayment, nor while repayment is 19 Loans made prior to July 1, 1981 were at 3%; loans made between July 1, 1981 and Sept. 30, 1981 were at 4%; and loans made on or after Oct. 1, 1981 are at 5%. CRS-11 suspended during deferment (described below). Borrowers must begin repaying Perkins Loans nine months after they no longer are enrolled at least half-time, and must complete repayment within 10 years after beginning repayment. Institutions may establish incentive repayment programs in which they may reduce the interest rate by up to one percentage point in instances where a student makes 48 consecutive payments. In addition, if a student repays a Perkins Loan in full prior to the end of the repayment period, an institution may discount the loan balance owed by up to 5% at the time the repayment is made. However, institutions may not use either federal or institutional funds from the Perkins revolving loan fund to absorb the costs of incentive repayment programs and must reimburse the fund on a quarterly basis for any lost income. Deferment. In general, deferment is a period during which a borrower is not required to make payments on the loan balance and during which interest does not accrue. Borrowers are not required to make payments on principal or interest while they are enrolled at least half-time at an eligible institution, nor while they are pursuing a graduate fellowship or rehabilitation training program approved by the Secretary. They also may not be required to make payments while they are seeking, but unable to find, full-time employment, or while experiencing economic hardship (for up to a maximum of three years in each instance). In addition, borrowers are eligible for concurrent deferment during any period while they are engaged in types of service which make them eligible for loan cancellation (discussed later). Borrowers are not required to request deferment in writing, but must provide the institution with information necessary to document their deferment status. They also are not required to resume making payments until six months following the completion of any of the periods described above for which they are exempted from making payments. Time in deferment does not count toward the 10-year repayment period. Forbearance. In general, forbearance is a temporary suspension or postponement of payments during which interest continues to accrue. A borrower may be granted forbearance from paying principal and interest or of principal only if the borrower’s debt burden due to HEA student financial assistance loans is greater than or equal to 20% of the borrower’s gross income, or if the institution determines that forbearance should be granted for other reasons. Examples include services in AmeriCorps or for reasons due to a “national military mobilization or other national emergency.”20 Borrowers are required to request forbearance in writing. Forbearance may be granted for a period of up to one year at a time, and may be renewed for a total period of up to three years. Cancellation. Individuals who have engaged in the following types of public service are eligible to have their loans cancelled.21 ! elementary or secondary school teacher at a public or private school located within the school district of a local educational agency 20 ED, FSA Handbook, vol. 6 — Campus-Based Programs, p. 6-71. 21 HEA, § 465(a) (20 U.S.C. § 1087ee(a)). CRS-12 ! ! ! ! ! ! ! ! (LEA) eligible for federal aid under Title I-A of the ESEA and in which low-income students are more than 30% of the school’s enrollment;22 full-time staff member in a Head Start program; full-time special education teacher or a professional provider of Individuals with Disabilities Education Act (IDEA) early intervention services; member of the U.S. Armed Forces in an area of hostilities; Peace Corps or Americorps*VISTA volunteer; full-time federal, state, or local law enforcement or corrections officer (including prosecuting attorneys, but not public defenders); full-time teacher of mathematics, science, foreign languages, bilingual education, or other shortage subject area; full-time nurse or medical technician; or full-time employee of a public or private nonprofit agency serving high-risk children from low-income communities and their families. Perkins Loan cancellation is based on both the number of years of service an individual has completed and a rate of cancellation applicable to the particular type of service. Table 2 presents the percentage of the principal of Perkins Loans that is cancelled for each year of service in an activity eligible for Perkins Loan cancellation. The terms of the program prescribe that the amount of principal and interest cancelled for public service shall not be considered as income for purposes of the Internal Revenue Code (IRC) of 1986. Table 2. Perkins Loan Cancellation Rates by Type of Service Percent of Perkins Loan principal cancelled per year of service Type of service 1st and 2nd years 3rd and 4th years 5th year and later Elementary or secondary school teacher in a designated low-income school 15% 20% 30% 100% Staff member in Head Start program 15% 15% 15% 100% Special education teacher/IDEA professional provider 15% 20% 30% 100% 12½% 12½% N/A 50% 15% 20% N/A 70% Armed Forces in area of hostilities Peace Corps or Americorps*VISTA volunteer 22 Max. total Teacher cancellations may be granted only to individuals teaching in a school serving children from low-income families and which is listed in the Directory of Designated LowIncome Schools for Teacher Cancellation Benefits. CRS-13 Percent of Perkins Loan principal cancelled per year of service Type of service 1st and 2nd years 3rd and 4th years 5th year and later Law enforcement or corrections officer 15% 20% 30% 100% Full-time teacher in shortage subject area 15% 20% 30% 100% Nurse or medical technician 15% 20% 30% 100% Employee of provider of services to high-risk children and families 15% 20% 30% 100% Max. total Source: HEA, § 465 (20 U.S.C. § 1087ee). The Secretary is required to reimburse institutions for Perkins Loans cancelled for students engaged in public service. Funds for reimbursing institutions for loan cancellations may not come from the appropriation designated for FCCs. Each year, the Secretary is required (to the extent feasible), to reimburse institutions within three months after they file their applications for reimbursement of campus-based funds. (Funds for the reimbursement of Perkins Loan cancellations are appropriated separately from funds for Perkins Loan FCCs.) Borrowers’ liability to repay Perkins Loans also is cancelled upon death or becoming permanently and totally disabled, as determined according to regulations issued by the Secretary. However, institutions are not reimbursed by the Secretary for loans cancelled due to death or disability. Loan Default. In general, a Perkins Loan is considered to be in default if the borrower has failed to comply with the terms of the promissory note or failed to make payments on a loan for 240 days (for a loan repayable monthly) or 270 days (for a loan repayable quarterly). The cohort default rate for an institution is defined as the percentage of current and former students entering repayment on Perkins Loans received for attendance at that institution who default on their loans before the end of the following award year.23 For institutions with less than 30 students entering repayment in any year, the cohort default rate is calculated over a three-year period. A borrower who has defaulted on a loan may rehabilitate the loan by making 12 consecutive on-time payments. Rehabilitated borrowers are returned to regular repayment status, begin a new 10-year repayment schedule, and have the default remove from their credit history. A borrower may rehabilitate a loan only once. In certain instances where a school has followed due diligence procedures and is unable to collect payments on a loan in which the amount owed is $25 or more, the school may assign a Perkins Loan (or NDSL) for collection to Federal Student Aid 23 HEA, § 462(g) [42 U.S.C. § 1087bb(g)]. CRS-14 (FSA) Collections at ED. Upon accepting a loan, ED acquires all rights in the loan and any payments made to the lending institution must be forwarded to ED.24 Any Perkins Loan collections received by ED are returned to the U.S. Treasury. Allocation of Funds to Institutions. Under the Perkins Loan program, funds are allocated to institutions according to procedures using a two-stage process somewhat similar to that used for the FSEOG and FWS programs — funds first are allocated according to institutions’ previous year’s allocations (base guarantee), and any remaining funds are allocated according to institutions’ share of excess eligible amounts of student need (fair share increase). Unlike the formulas for the FSEOG and FWS programs, however, the Perkins Loan allocation formulas also include a default penalty applicable to institutions with large proportions of borrowers defaulting on their Perkins Loans. The default penalty is used to limit the awarding of Perkins Loan FCCs to only institutions with cohort default rates below a maximum threshold. Institutions with a cohort default rate of less than 25% are assigned a default penalty of 1 and those with a default rate of 25% or greater are assigned a default penalty of 0. According to the allocation formulas, FCC funds first are allocated to IHEs according to their previous year’s allocations with priority going to institutions that participated in the Perkins program in FY1999. These institutions are eligible to receive 100% of their FY1999 allocation.25 Institutions that began participating in the Perkins Loan program after FY1999, but which are not first- or second-time participants, are eligible to receive 100% of the amount they received in their first year of participation. Those institutions that began participating after FY1999, and which are first or second time participants, generally are eligible to be awarded either 90% of the amount they received in the previous year or 90% of the amount awarded to comparable institutions on a per-capita basis. However, if an institution began participating in the Perkins Loan program after FY1999 and received a larger allocation in its second year of participation than in its first, it is allocated 90% of the amount it received in its second year of participation if this is a larger amount than it would otherwise receive. The minimum grant amount is $5,000. Any institution with a default penalty of 0, however, has its FCC allotment reduced to 0. After allocating funds according to institutions’ previous year’s allocations, any remaining FCC funds are allocated based on each institution’s fair share of excess eligible student need. This is the amount by which an institution’s share of eligible self-help need exceeds the amount already allocated to it according to its base guarantee. Like in the FWS program, self-help need is calculated separately for undergraduate students, and graduate and professional students according to formulas that take into account the institution’s COA and the approximate EFCs of students attending the institution. However, for the Perkins program, an institution’s eligible amount of need is the amount of the institution’s self-help need, minus the 24 25 ED, FSA Handbook, vol. 6 — Campus-Based Programs, pp. 6-116 through 6-116. According to the Department of Education’s Explanation of Worksheet 2005-2006 Award Period for the campus-based programs, this is equal to the institution’s award year 19992000 conditional guarantee, multiplied by its award year 1999-2000 cohort default penalty factor, multiplied by a 60.77% reduction factor. CRS-15 institution’s collections (defined as the amount the institution collected in the second year prior to the award year, multiplied by 1.21), multiplied by its cohort default penalty (either 1 or 0). The Secretary is authorized to reallocate any excess Perkins Loan funds returned by institutions. Eighty percent of these funds must be reallocated to institutions according to their excess eligible amounts of student need, while the remaining 20% can be reallocated according to regulation established by the Secretary. An institution returning more than 10% of its allocation will have its subsequent year’s allocation reduced by the amount returned, unless waived by the Secretary as contrary to the interest of the program. Transfer of Funds Between Campus-Based Programs Institutions are afforded flexibility in being able to transfer funds between the campus-based programs in which they participate. They may transfer a total of 25% of their allotment under the Perkins Loan program for use in the FSEOG or FWS programs, or both. Institutions also may transfer up to 25% of their allotment under the FWS program for use in the FSEOG program. However, no funds may be transferred out of the FSEOG program. Institutions generally have used their transfer authority to move funds to the FSEOG program, primarily from FWS. For award year 2003-2004, based on data reported to ED, 1,486 institutions participating in the FWS program transferred a total of $97.1 million to the FSEOG program. Also in that year, 198 institutions transferred $7.7 million from Perkins to FSEOG and 75 institutions transferred $1.8 million from Perkins to FWS.26 Natural Disaster Student Fairness Act The Natural Disaster Student Aid Fairness Act (P.L. 109-86) grants the Secretary authority through October 7, 2006 to waive certain components of the campus-based programs for IHEs that are located in areas affected by Hurricane Katrina and Hurricane Rita (hereafter referred to as a Gulf hurricane disaster) or that have accepted for enrollment any students affected by a Gulf hurricane disaster. Firstly, with respect to funds made available for the 2004-2005 and 2005-2006 academic years, the Secretary must waive the institutional matching requirement for affected IHEs, and (after considering an IHE’s student population and existing resources) may waive the institutional matching requirement for IHEs that have accepted for enrollment any affected students. Secondly, with respect to affected IHEs and IHEs that have accepted for enrollment any affected students, the Secretary shall (a) reallocate to those institutions any funds returned as unused from the 20042005 award year; and (b) waive any allocation reduction that would otherwise apply to the IHE for award year 2006-2007 for returning more than 10% of its allocation. 26 U.S. Department of Education, Office of Postsecondary Education, Federal CampusBased Programs Data Book 2005, at [http://www.ed.gov/finaid/prof/resources/ data/databook2005/index.html], visited Jan. 17, 2006. (Hereafter cited as ED, Federal Campus-Based Programs Data Book, 2005.) CRS-16 Lastly, the availability of funds that would otherwise expire on September 30, 2005 is extended for one additional year; and the Secretary is granted authority to recall any funds that would lapse on September 30, 2005 for reallocation to eligible IHEs. On November 7, 2005, the Secretary published a notice in the Federal Register regarding the reallocation of campus-based aid and waivers of statutory and regulatory provisions pursuant to the Natural Disaster Student Aid Fairness Act.27 Administrative Costs Institutions participating in the campus-based programs are entitled to an administrative cost allowance to cover the expenses of administering the programs. Administrative cost allowances are determined according to the following schedule: ! ! ! 5% of the institution’s first $2,750,000 in expenditures; plus 4% of the institution’s expenditures greater than $2,750,000 and less than $5,500,000; plus 3% of the institution’s expenditures in excess of $5,500,000. In calculating administrative costs, institutions include both federal and institutional expenditures.28 Institutions take their administrative cost allowances out of federal funds allocated for the FSEOG and FWS programs, and from cash on hand in their revolving loan funds for the Perkins Loan program. Institutions have some discretion in determining how to allocate administrative costs across the three campus-based programs. Administrative cost allowances as claimed for the campus-based programs are shown in Table 3. Table 3. Administrative Cost Allowances for the Campus-Based Programs: Award Year 2003-2004 Campus-based program FSEOG Administrative cost allowance $15,502,210 FWS 53,756,578 Perkins Loans 81,231,194 Total 150,489,982 Source: U.S. Department of Education, Office of Postsecondary Education, Federal Campus-Based Programs Data Book 2005. 27 Office of Postsecondary Education, Department of Education, “Notice regarding reallocation of campus-based aid and waivers of statutory and regulatory provisions pursuant to the Natural Disaster Student Aid Fairness Act, Public Law 109 — 86,” 70 Federal Register 67373-67374, Nov. 7, 2005; available at [http://ifap.ed.gov/fregisters/attachments/FR11072005.pdf]. 28 HEA, § 489 (20 U.S.C. § 1096); ED, FSA Handbook, vol. 6 — Campus-Based Programs, pp. 6-25 through 6-26. CRS-17 Funding and Program Data This section presents budget information on past funding levels for the campusbased programs, and also program information including the number of institutions participating in each program, the number of students awarded aid and average award amounts, and the distribution of campus-based aid according to student and institutional characteristics. Funding for the Campus-Based Programs The share of postsecondary student financial aid provided through the campusbased programs has decreased steadily over the past 30 years. According to the College Board, whereas in the 1971-1972 award year, 19.7% of total federal student aid was provided through the campus-based programs, only 3.6% was in academic year 2004-2005.29 Now the greatest proportion of student aid is provided through federal loans (other than Perkins Loans) and an increasing amount is provided through higher education tax benefits. Over the past several years, funding has increased modestly for the FSEOG program, while funding for the FWS and Perkins Loan programs (FCCs and loan cancellations) has decreased. For FY2005 and FY2006, no funding was provided for Perkins FCCs. Annual funding levels for each of the campus-based programs, beginning with FY1999 (the first year since the HEA last was reauthorized), are presented in Table 4. Table 4. Campus-Based Program Funding: FY1999-2006 (In thousands of dollars) Fiscal year funding FSEOG FWS PerkinsFCC Perkins loan cancellations 1999 Appropriation $619,000 $870,000 $100,000 $30,000 2000 Appropriation 631,000a 934,000 100,000 30,000 2001 Appropriation 691,000 1,011,000 100,000 60,000 2002 Appropriation 725,000 1,011,000 100,000 67,500 2003 Appropriation 760,028 1,004,428 99,350 67,061 2004 Appropriation 770,455 998,502 98,764 66,665 2005 Appropriation 778,720 990,257 0 66,132 2006 Appropriationb 770,933 980,354 0 65,471 29 The College Board, Trends in Student Aid 2005,Online Table B-1a, Aid Used to Finance Postsecondary Education Expenses in Current Dollars (in Millions), 2005, at [http://www.collegeboard.com/prod_downloads/press/cost05/05-aid_charts.xls], visited Jan. 17, 2006. CRS-18 Sources: U.S. Department of Education, Budget Service, Education Department Budget History Table: FY1980 — Present; and U.S. Department of Education, Budget Service, FY2006 Congressional Action. a. Includes $10 million Emergency Appropriation for victims of Hurricanes Dennis and Floyd. b. Amounts reflect a 1% government-wide rescission contained in P.L. 109-148, and as applied by the U.S. Department of Education Budget Service. Under each of the campus-based programs federal funds are required to be matched by the participating institution (or the employer under FWS, if other than the institution). As previously described, under each of the programs, the institutional match generally is one-third the amount of the federal share (however, in the FWS program, the required match can be as high as one-half of the federal share or as low as zero, depending on the type of employment). Because of the matching requirements, the campus-based programs leverage federal funding to provide an amount of student financial aid that is greater than the amount of federal funds appropriated for each program. Institutional Participation In fall of 2004, 6,617 postsecondary institutions were eligible to participate in HEA Title IV financial aid programs.30 During award year 2004-2005, approximately 58% of Title IV-eligible institutions participated in the FSEOG program, while approximately 51% participated in FWS. However, only approximately 27% of Title IV institutions participated in the Perkins Loan program. While fewer institutions of all types participate in Perkins Loan program than in either FSEOG or FWS, far fewer two-year and proprietary participate in the Perkins Loan program than the other two programs.31 It is possible that these lower levels of participation are due to factors such as the administrative burden of administering a revolving loan fund and the generally higher cohort default rates of students who attend these types of institutions. Over the past decade, there has been a slight increase in the number of institutions participating in the FSEOG and FWS programs. Institutional participation in the Perkins Loan program, however, has continued a pattern of decline that has occurred over the past two decades. Figure 1 displays the number of institutions participating in each of the campus-based programs since the 19841985 award year. 30 U.S. Department of Education, National Center for Education Statistics, Integrated Postsecondary Education Data System (IPEDS), Peer Analysis System, 2004. 31 ED, Federal Campus-Based Programs Data Book, 2005. CRS-19 Figure 1. Institutions Participating in the Campus-Based Programs: Award Years 1984-1985 through 2005-2006 5,000 Institutions 4,000 3,000 2,000 1,000 Award Year FWS 06 05 20 0 520 04 20 0 420 03 20 0 320 02 20 0 20 0 220 01 FSEOG 120 00 20 0 020 99 19 9 920 98 19 9 819 97 19 9 719 96 19 9 619 95 19 9 519 94 19 9 419 93 19 9 319 92 19 9 219 91 19 9 119 90 19 9 019 89 19 8 919 88 19 8 819 87 19 8 719 86 619 19 8 519 19 8 19 8 419 85 - Perkins Sources: ED, Federal Campus-Based Programs Data Book, 2005 and ED, Federal Campus-Based Programs Data Book, 2004. Students Served and Average Aid Amounts This section presents information on the number of students being served and the average award amounts for each of the three campus-based programs based on program data from ED. To facilitate comparison of student award amounts over time, these data have been adjusted to 2003 dollars according to the consumer price index for all urban consumers (CPI-U). FSEOG. FSEOG program data on the number of students granted awards and the average award amount since the 1984-1985 award year (in constant 2003 dollars) are presented in Figure 2. Once the smallest of the three campus-based programs in terms of the number of students served, the FSEOG program has grown steadily since its inception in the 1967-1968 award year to become the largest today. Since award year 1989-1990, it has served more students annually than either of the other two campus-based programs. The number of students receiving FSEOG awards increased considerably during the 1990s, reaching 1.39 million in 2003-2004 (more than twice as many students as received awards in 1984-1985). The average amount of aid provided per student under the FSEOG program is the lowest among the three campus-based programs. As increasing numbers of students have been served through FSEOG over the past two decades, the average FSEOG award amount has decreased (in real terms) by 23%, from $1,015 in 1984-1985 (2003 dollars) to $766 in 2003-2004, though it has increased in current dollars. CRS-20 Figure 2. FSEOG: Number of Students Receiving Awards and Average Award Amounts, 1984-1985 through 2003-2004 1,500,000 $2,500 $2,000 1,000,000 $1,500 750,000 $1,000 500,000 Average FSEOG Award FSEOG Awards Granted 1,250,000 $500 250,000 $- 19 19 84 -8 5 85 -8 19 6 86 19 87 87 -8 19 8 88 19 89 89 19 90 90 -9 19 1 91 19 92 92 -9 19 3 93 19 94 94 19 95 95 19 96 96 19 97 97 19 98 9 19 8-9 99 9 -2 0 20 00 00 20 01 01 20 02 02 20 03 03 -0 4 0 Students Served Avg. Award Avg. Award (2003 $'s) Source: U.S. Department of Education. Office of Postsecondary Education. Federal Campus-Based Programs Data Book 2005. FWS. FWS program data are presented in Figure 3. For most of the past two decades, between 650,000 and 750,000 students have been served annually through FWS; however, slightly more than 750,000 students received FWS aid in 2002-2003 and 2003-2004. Since the mid-1980s, the average FWS award (in 2003 dollars) has remained slightly below $1,500. From the 1994-1995 award year through the 19992000 award year, institutions participating in the FWS program were required to expend at least 5% of their initial and supplemental FWS allocations to compensate students employed in community service jobs. Beginning with award year 20002001, institutions are now required to expend 7% of their FWS allotment on community service and to operate at least 1 tutoring or family literacy project. Since the community service requirements have been in place, ED reports that the number of students employed in community service increased from 58,596 in award year 1994-1995 to 131,295 in award year 2002-2003. The shaded portion of the bars in Figure 3 indicates the number of students employed in community service. CRS-21 Figure 3. FWS: Number of Students Receiving Awards and Average Award Amounts, 1984-1985 through 2003-2004 1,500,000 $2,500 $2,000 1,000,000 $1,500 750,000 $1,000 500,000 Average FWS Award FWS Awards Granted 1,250,000 $500 250,000 $- 19 84 19 85 85 19 86 86 -8 19 7 87 19 88 88 -8 19 9 89 19 90 90 19 91 91 19 92 92 19 93 93 19 94 94 -9 19 5 95 19 96 96 19 97 97 19 98 9 19 8-9 99 9 -2 0 20 00 00 20 01 01 20 02 02 20 03 03 -0 4 0 Students Served Students in Community Service Avg. Award Avg. Award (2003 $'s) Source: U.S. Department of Education. Office of Postsecondary Education. Federal Campus-Based Programs Data Book 2005. Success in meeting the community service requirements is determined by dividing the total funds used to compensate students employed in community service jobs by the institution’s total FWS allocation; and by determining whether the institution expended part of its allocation to compensate students for community service employment as reading tutors or for family literacy activities. Institutions may apply to the Secretary for a waiver from either or both of the FWS community service requirements. There is no explicit penalty for failing to meet the requirement. Table 6 shows the number and percentage of institutions meeting the FWS community service requirements since award year 1994-1995.32 As can be seen by the table, while the 5% requirement was in place, the percentage of institutions meeting the requirement trended upward. However, since implementation of the dual requirements of expending 7% of their allocation on community service employment and having at least one tutoring or family literacy project, institutions have struggled to meet both requirements. It appears that more institutions are having difficulty meeting the tutoring and family literacy project requirement than the 7% expenditure requirement. 32 A small number of schools (generally less than 100 each year) apply for and receive waivers from the FWS community service requirements. Table 6 does not reflect whether an institution has an approved waiver. CRS-22 Table 6. Number and Percent of Institutions Meeting FWS Community Service (CS) Requirements Number with a tutoring or family literacy project Total FWS institutionsa Number meeting CS percent expenditure standard 1994-1995b 3,257 2,481 N/A N/A 76.2 1995-1996b 3,249 2,781 N/A N/A 85.6 1996-1997b 3,231 2,927 N/A N/A 90.6 1997-1998b 3,282 2,859 N/A N/A 87.1 1998-1999b 3,342 3,153 N/A N/A 94.3 1999-2000b 3,230 2,919 N/A N/A 90.4 2000-2001c 3,221 2,791 2,848 2,600 80.7 2001-2002c 3,250 2,870 2,905 2,715 83.5 2002-2003c 3,276 2,942 2,606 2,457 75.0 2003-2004c 3,271 2,974 2,560 2,445 74.7 Award year Number meeting both standards Percent meeting applicable standards Sources: ED, Community Service in the FWS Program; and U.S. Department of Education, Office of Postsecondary Education, Fiscal Operations Report program data for award years 1999-2000, 20002001, 2001-2002, 2002-2003, and 2003-2004 from annual Fiscal Operation Reports and Applications to Participate (FISAPs). a. Institutions reporting expenditure of FWS authorizations. (A small number of institutions in receipt of FWS allotments, but not reporting the expenditure of funds for FWS, are excluded from the table.) b. Requirement to expend 5% of FWS allocation on community service. c. Requirement to expend 7% of FWS allocation on community service and to operate at least one tutoring or family literacy project. Perkins Loans. Historical data on the Perkins Loan program are provided in Figure 4. Slightly fewer students receive aid through the Perkins Loan program than through FWS, making it the smallest of the three campus-based programs in terms of number of students served. Since 1984-1985, the annual number of students served has averaged between 630,000 and 760,000. The average Perkins Loan amount, however, is considerably greater than the amount of aid provided under either FSEOG or FWS. Since the early 1990s, average Perkins Loan amounts have increased from $1,709 and $2,166 (in 2003 dollars). CRS-23 Figure 4. Perkins Loans: Number of Students Receiving Awards and Average Award Amounts, 1984-1985 through 2003-2004 1,500,000 $2,500 $2,000 1,000,000 $1,500 750,000 $1,000 500,000 Average Perkins Loan Perkins Loans Awarded 1,250,000 $500 250,000 $- 19 19 84 -8 5 85 -8 19 6 86 19 87 87 19 88 88 19 89 89 19 90 90 -9 19 1 91 19 92 92 19 93 93 -9 19 4 94 19 95 95 19 96 96 19 97 97 19 98 9 19 8-9 99 9 -2 0 20 00 00 20 01 01 -0 20 2 02 20 03 03 -0 4 0 Students Served Avg. Award Avg. Award (2003 $'s) Source: U.S. Department of Education. Office of Postsecondary Education. Federal Campus-Based Programs Data Book 2005. Perkins Loans cohort default rates have declined from a high of 12.95% in 1997 to 8.29% in 2004. (See Table 7.) Four-year institutions typically have the lowest cohort default rates, while those of two-year and proprietary institutions are much higher. In comparison, FFEL/Direct Loan cohort default rates typically have been a few percentage points lower than rates for Perkins Loans.33 At the end of FY2003, the Administration reported a total of $1.2 billion in outstanding defaulted Perkins Loans, with $321 million of this amount assigned to ED for collection.34 Table 7. Perkins and FFEL/DL Cohort Default Rates: 1997-2004 Loan type 1997 1998 1999 2000 2001 2002 2003 2004 Perkinsa 12.95 12.48 11.54 10.61 9.99 8.35 8.85 8.29 FFEL/DLb 10.4 9.6 8.8 6.9 5.6 5.9 5.4 5.2 Sources: ED, Federal Campus-Based Programs Data Books, 1997 through 2005; U.S. Department of Education, Official Cohort Default Rates for Schools, National Student Loan Default Rates. a. Perkins Loan cohort default rates are for the two-year period ending June 30 of the year indicated. b. FFEL/DL cohort default rates are for the two-year period ending Sept. 30 of the year indicated. 33 U.S. Department of Education, National Student Loan Default Rates, at [http://www.ed. gov/offices/OSFAP/defaultmanagement/defaultrates.html], visited Jan. 17, 2006. 34 Office of Management and Budget, Budget of the United States Government, Fiscal Year 2005 — Appendix, Department of Education, Office of Student Financial Assistance, p. 361. CRS-24 Reauthorization of the Campus-Based Programs The 109th Congress is currently in the process of considering reauthorization of the HEA. On September 22, 2005, the House Committee on Education and the Workforce reported H.R. 609, the College Access and Opportunity Act of 2005 (H.Rept. 109-231). On September 8, 2005, the Senate Committee on Health, Education, Labor, and Pensions (HELP) marked up and ordered to be reported S. 1614, the Higher Education Amendments of 2005. In the first session of the 109th Congress, consideration of HEA reauthorization was influenced to a large extent by reconciliation of the federal budget, particularly with respect to student loans.35 As budget reconciliation proceeded, the Higher Education Amendments of 2005 — which include amendments to the campus-based programs — were incorporated into S. 1932, the Deficit Reduction Omnibus Reconciliation Act of 2005, and passed by the Senate on November 3, 2005, by a vote of 52 to 47. The House did not include substantive changes to the campus-based programs in its reconciliation bill, H.R. 4241. Subsequently, differences between the House (H.R. 4241) and Senate (S. 1932) bills were reconciled and reported in the conference report to S. 1932 (H.Rept. 109362). On December 19, 2005, the House agreed to the conference report by a vote of 212-206. On December 21, 2005, the Senate amended the conference report and approved it, as amended, by a vote of 51-50. It was then sent back to the House. S. 1932 does not substantively address the campus-based programs, with the exception of one provision authorizing deferments under the Perkins Loan program for a period of up to three years for borrowers while serving on active duty in the armed services or while performing qualifying National Guard duty during a war or other military operation or national emergency. Significant changes to the campusbased programs that are proposed under H.R. 609 and S. 1614 are described and analyzed in the remainder of this section. In instances where proposed changes would apply in a similar manner to more than one of the programs, they are presented together. H.R. 609 and S. 1614 Allocation of funds to institutions: FSEOG, FWS, and Perkins Loans. Under current law, the majority of federal funding for the campus-based programs (FSEOG, FWS, and federal capital contributions (FCCs) for the Perkins Loan program) is allocated to IHEs on the basis of institutional base guarantees, with the remainder being allocated on the basis of each institution’s proportionate amount — or “fair share” — of aggregate student financial need. Under H.R. 609, the procedures used for allocating funds to IHEs would be amended to incrementally phase out base guarantee funding so that increasing proportions of funding would be allocated according to existing “fair share” procedures. Beginning in FY2008, funding for base guarantees would be reduced by 20 percentage points every two years until being completely phased out by FY2016. S. 1614 would retain the existing procedures for allocating funds under which institutional base guarantees are 35 For additional information on budget reconciliation, see CRS Report RL33132, Budget Reconciliation Legislation in 2005, by Robert Keith, and CRS Report RS22308, Student Loans and FY2006 Budget Reconciliation, by Adam Stoll. CRS-25 awarded prior to allocating the remainder of funds according to “fair share” procedures. Both H.R. 609 and S. 1614 would retain the fair share allocation procedures in their current form, with the exception of an increase in the annual allowance for books and supplies from $450 to $600. A detailed analysis of the proposal under H.R. 609 to phase out institutional base guarantees in favor of allocating all funding according to “fair share” allocation procedures is beyond the scope of this report. However, past CRS analysis of the allocation procedures for the campus-based programs using award year 2004-2005 data has shown that if the allocation procedures were to be changed by completely phasing out base guarantees in favor of allocating all funds according to fair share procedures, a redistribution of funding allocations would likely occur.36 Prior analysis has shown that under all three programs, more IHEs likely would experience funding increases than decreases, and that on average, the increase in funds received by gaining institutions would be smaller than the cut in funding experienced by institutions seeing funding decreases. It has also been shown that in many instances, higher-cost institutions currently receive less than their “fair share” of funding as calculated according to the fair share formula — and that since this is the case, if base guarantees were to be completely phased out so that all funds were to be allocated according to existing fair share procedures, the distribution of funds likely would shift slightly to the advantage of higher-cost institutions. Optional Allocation of Funds Based on Outcomes of Pell Grant Recipients: FSEOG and FWS. Under current law, in the FSEOG and FWS programs, up to 10% of program funding in excess of $700 million may be allocated to IHEs from which 50% or more of Pell Grant recipients either graduate from or transfer to four-year institutions.37 H.R. 609 would amend the allocation procedures for the FSEOG and FWS programs to permit up to 10% of any funds in excess of $700 million appropriated under Title IV-A-2 (FSEOG) and Title IV-C (FWS) of the HEA, respectively, to be allocated to four-year institutions at which at least 10% of students are Pell Grant recipients and which have graduation rates for Pell Grant recipients that exceed the median rate for their class of institution; or to two-year institutions at which at least 10% of students are Pell Grant recipients and which have graduation rates or rates of transfer to four-year institutions that exceed the median rate for their class of institution. S. 1614 would retain the procedures under current law. 36 The procedures for allocating funds to institutions under the campus-based programs are described in detail and analyzed in CRS Report RL32775, The Campus-Based financial Aid Programs: A Review and Analysis fo the Allocation of Funds to Institutions and the Distribution of Aid to Students, by David P. Smole. 37 Up to 10% of funds in excess of $700 million appropriated under: (a) HEA, Title IV-A (Pell Grants, TRIO, GEAR-UP, Academic Achievement Incentive Scholarships, FSEOG, LEAP, Migrant and Seasonal Farmworker Programs, the Robert C. Byrd Honors Scholarship Program, Child Care Access Means Parents in School, and Learning Anytime Anywhere Partnerships) may be so allocated under the FSEOG program; and (b) HEA, Title IV-C (FWS) may be so allocated under the FWS program. CRS-26 In the past, it has not been a common occurrence under current law for the Secretary to allocate FSEOG or FWS funds in excess of $700 million to IHEs graduating or transferring more than 50% of their Pell Grant recipients. However, for the 1997-1998 award year, the Secretary awarded $13 million in FWS funding to IHEs that certified that 50% or more of their 1990-1991 Federal Pell Grant recipients either graduated or transferred to a four-year college.38 Two practical issues may be relevant when considering the proposal contained in H.R. 609 to grant the Secretary authority to allocate up to 10% of FSEOG or FWS funding in excess of $700 million to IHEs that meet the proposed Pell Grant recipient graduation and transfer rates. First, it appears that in order to implement this proposal, a new data collection requirement may need to be developed for participating institutions. While information on graduation and transfer rates is currently collected as part of the Integrated Postsecondary Education Data System (IPEDS) Graduation Rate Survey,39 this information is only collected for first-time, full-time students, and does not distinguish between Pell Grant recipients and nonrecipients. Information on Pell Grant recipients would be necessary for the calculation of the proposed measures, and it also may be important to collect graduation and transfer data for less-than-full-time students and for students transferring into an institution. For example, in award year 2003-2004, less than 46% of Pell Grant recipients were enrolled full-time.40 Second, any funds reserved for allocation to eligible institutions according to the proposed criteria would reduce funding available for allocation according to the fair share allocation procedures. Using FY2005 appropriation levels as an example, up to $7.9 million in FSEOG funds (1% of the total), and up to $28.4 million in FWS funds (2.9% of the total), would be available for allocation to IHEs with Pell Grant recipient graduation and transfer rates that are higher than the median for their institution type. However, 59% of FSEOG funds were allocated for base guarantees, as were 67% of FWS funds. So, the 41% of FSEOG funds available for fair share would be reduced by any amount allocated on the basis of Pell Grant recipient graduation and transfer rates, as would the 33% of FWS funds available for fair share. If base guarantee funding were to be phased out, as is also proposed under H.R. 609 (see above analysis), then allocating funds based on Pell Grant recipient graduation and transfer rates would, over time, have less of an impact on the amount of funds available for fair share allocations. 38 U.S. Department of Education, Office of Postsecondary Education, Dear Colleague Letter CB-97-11, July 1, 1997; [http://www.ifap.ed.gov/dpcletters/doc0246_bodyoftext.htm]. 39 For further information on the IPEDS Graduation Rate Survey, see L.G. Knapp, J.E. Kelly-Reid, R.W. Whitmore, S. Huh, B. Levine, M. Berzofsky, and S.G. Broyles, Enrollment in Postsecondary Institutions, Fall 2003; Graduation Rates 1997 & 2000 Cohorts; and Financial Statistics, Fiscal Year 2003 (NCES 2005 — 177). U.S. Department of Education (Washington, D.C.: National Center for Education Statistics), available at [http://nces.ed.gov/pubs2005/2005177.pdf]. 40 U.S. Department of Education, Office of Postsecondary Education, 2003-2004 Federal Pell Grant Program End-of-Year Report, Table 13. Federal Pell Grant Recipient Enrollment Status by Type and Control of Institution, available at [http://www.ed.gov/ finaid/prof/resources/data/pell0304.pdf]. CRS-27 Targeting FSEOG aid to Pell Grant recipients: FSEOG. Under current law, FSEOG aid must first be awarded to students with exceptional financial need, with priority going to students who receive Pell Grants.41 H.R. 609 would change the procedures for awarding FSEOG aid to students to (a) require that Pell Grant recipients meeting the requirements of HEA § 48442 be given priority over other students, and to (b) prohibit IHEs from awarding more than 10% of their FSEOG aid to students who did not receive a Pell Grant in the prior year. S. 1614 would retain the procedures for awarding FSEOG aid as provided under current law. The proposal under H.R. 609 would amend the language specifying the criteria for awarding FSEOG aid to students by requiring simply that Pell Grant recipients must be given priority over other eligible students. The proposal also would limit the amount of FSEOG aid that IHEs could award to students who had not received Pell Grants in a prior year to 10% of their allocation. The proposal does not specify whether first-year Pell Grant recipients (e.g., freshmen or other students receiving a Pell Grant for the first time) would be excluded from the 10% limit. However, as currently drafted, a strict interpretation could have the effect of limiting the amount of FSEOG aid that could be awarded to first-year Pell Grant recipients. Community Service Requirements: FWS. Under current law, IHEs participating in the FWS program are required to use at least 7% of their FWS allocation to compensate students employed in community service jobs. (They must also use 100% of any excess FWS funds they receive through the reallocation of other institutions’ unspent FWS funds to compensate students in community service.) The Secretary is permitted to waive the 7% community service requirement if she determines that enforcing the requirement would cause hardship for students at the institution. S. 1614 would authorize the Secretary to also waive the requirement that an IHE use 7% of its FWS funding to compensate students employed in community service jobs if the IHE certified that 15% or more of its total full-time enrollment is employed in community service jobs or in tutoring and literacy activities. H.R. 609 would not modify the 7% community service requirement. As described earlier in this report, a substantial portion of IHEs are not meeting current community service requirements. S. 1614 would permit the Secretary to waive the requirement that IHEs use 7% of their FWS funding for community service compensation if they can certify that 15% of their students are employed in community service or tutoring and family literacy jobs. These students would not have to be receiving FWS aid to be included in the calculation. It appears that this proposal would allow institutions with strong community service participation to remain in compliance with FWS requirements even if a substantial portion of this community service was performed outside of the FWS program. S. 1614 would not establish any explicit penalty for IHEs that fail to comply with their community service requirements. 41 HEA, § 413C(b)(2). The term “students with exceptional financial need” is defined to mean students at the institution with the lowest EFCs. 42 HEA § 484 includes student eligibility requirements. CRS-28 Under current law, “community services” are defined in HEA § 441(c)(1), and include, among other activities, fields such as “child care (including child care services provided on campus that are open and accessible to the community).” H.R. 609 would amend the definition of community services applicable to FWS employment by eliminating language specifying that child care services provided on campus must be open and accessible to the community. S. 1614 would retain the definition under current law. H.R. 609 would also increase the amount of FWS funding that IHEs could use for job location and development from the lesser of 10% of their allocation or $50,000 (current restrictions) to the lesser of 15% of their allocation or $75,000, and would specify that at least one-third of the funds used for job location and development must be used to locate and develop community service jobs. S. 1614 would amend the provisions regarding the use of funds for job location and development to the lesser of 10% of their allocation, or $75,000. Terms and Conditions of Loans: Perkins Loans.43 Under current law, the maximum amount that may be borrowed per academic year is $4,000 for undergraduate students, and $6,000 for graduate and professional students. The maximum aggregate amount that may be borrowed is limited to $20,000 in unpaid principal for undergraduate students who have completed two years of study, but who have not completed a baccalaureate degree; $40,000 for graduate and professional students; and $8,000 for any other students. H.R. 609 would increase annual loan limits for Perkins Loans from $4,000 to $5,500 for undergraduate students; and from $6,000 to $8,000 for graduate and professional students. It would also increase aggregate loan limits from $20,000 to $27,500 for undergraduate students who have completed two years of undergraduate education, but who have not yet earned a bachelor’s degree; from $40,000 to $60,000 for graduate and professional students; and from $8,000 to $11,000 for any other students. S. 1614 would retain current loan limits. Loan limits for Perkins Loans would be increased under H.R. 609, as would loan limits for first-year and second-year students borrowing FFEL and DL Stafford Loans under H.R. 609 and S. 1614. (Perkins Loan limits would not be increased under S. 1614.) However, the practical effect of increasing loan limits for Perkins Loans would operate differently than would increasing loan limits for Stafford Loans. The FFEL and DL Stafford Loan programs operate as quasi-entitlement programs — meaning that eligible students may borrow up to the amount for which they qualify, irrespective of annual appropriations. However, absent significant new appropriations for FCCs, since each participating institution administers its Perkins Loan program with a constrained pool of funds, its ability to make new loans is limited by the size of its revolving loan fund. (As previously mentioned, each institution recapitalizes its loan fund by depositing the principal and interest repaid by students who previously borrowed under the program, as well as any other program-related charges or earnings.) Thus, an increase in loan limits for Stafford 43 Additional information on terms and conditions of Perkins Loans and how they compare with Stafford Loans is provided in CRS Report RL32854, Federal Perkins Loans and FFEL/DL Stafford Loans: A Brief Comparison, by David P. Smole. CRS-29 Loans would likely result in an increased ability to borrow for individual students, with no direct effect on the aggregate number of students eligible; while under the Perkins Loan program, the borrowing of larger amounts by individual students likely would result in a corresponding decrease in the aggregate number of borrowers. Under current law, borrowers of Perkins Loans are required to request forbearance in writing. (This is in contrast to the procedures for Stafford Loans, in which requests for forbearance need not be made in writing.) Both H.R. 609 and S. 1614 would eliminate the requirement that requests for forbearance be made in writing. Under current law, borrowers of Perkins Loans who have been employed in certain types of public service are eligible to have the obligation to repay some or all of the unpaid principal on their loans canceled. (See Table 2.) For many types of public service (e.g., as an elementary or secondary school teacher in a high-poverty school, or as a nurse or medical technician), a borrower may have up to 100% of his or her loan canceled incrementally over five years of service. However, for service in the armed forces in an area of hostilities, the maximum amount of loan principal that borrowers may have canceled is 50%: 12½% per year over four years of service. H.R. 609 would make the loan cancellation terms for service in the armed forces in an area of hostilities similar to the provisions applicable to most of the other forms of qualifying public service employment, including teaching and nursing. S. 1614 would add three new types of public service employment for which up to 100% of loan principal may be canceled: (a) employment as a full-time faculty member at a tribally controlled college or university, (b) (for individuals with a master’s degree in library science) employment as a librarian in a school library in an ESEA Title I-A school or in a public library serving a geographic area that serves an ESEA Title I-A school, and (c) (for individuals with a master’s degree) for employment as a full-time speech therapist working exclusively with ESEA Title I-A schools. S. 1614 would retain the 50% limit on loan principal that may be canceled for borrowers who serve in the armed forces in an area of hostilities. Transfer of Allotments Between Campus-Based Programs. Under current law, IHEs are permitted to transfer up to 25% of the Perkins Loan FCC allotment to the FSEOG or FWS programs (or both); and may transfer up to 25% of the FWS allotment to the FSEOG program. S. 1614 would alter the procedures for transferring allotments to permit IHEs to transfer up to 25% of their FSEOG allotment to the FWS program. H.R. 609 would retain the procedures under current law