Federal Grants

Higher Ed Watch has some questions for the Bush administration about its Fiscal Year 2009 higher education budget: [slideshow]

1) The Federal Family Education Loan (FFEL) program and the Direct Loan program show similar per loan costs for 2008 and 2009, with the FFEL program showing a slight cost advantage for the first time. However, page 364 of the Budget Appendix notes that costs are higher for the Direct Loan program, because it holds nearly 100 percent of student loans that have defaulted (under FFEL and Direct Loans) and have been rehabilitated through consolidation.

Can per loan program costs be accurately compared when high-default risk FFEL loans are dumped into the Direct Loan program? If OMB and the Department of Education corrected cost estimates for this bias, how would the costs change? Which program would be cheaper for taxpayers if costs were controlled for borrower differences?

2) Federal funds held by state guaranty agencies used to pay loan default claims under the Federal Family Education Loan (FFEL) program nearly doubled to $1.1 billion in 2007 from $579 million in 2006. Are the federal funds held by guarantee agencies in excess of what is needed to pay default claims, and if so, would the administration recommend recalling those funds?

The House version of legislation to reauthorize the Higher Education Act contains language that proposes to change how student loan defaults are calculated, a move that could have serious implications for schools and students’ access to federal student aid. This is a welcome change to the current shaky three-part system of accountability that fails to provide good information about the absolute and relative quality of a school’s education.

The Current System

The absence of national examinations leaves only three things with enough teeth to effectively judge colleges that are not meeting desired standards for higher education: (1) accreditation, (2) licensure, and (3) loan defaults. Failure to meet these requirements can cause the school to lose the ability to receive federal funds — meaning all its students will be denied Pell Grants, Stafford Loans, and other forms of aid. Unfortunately, these measures do little more than guard against diploma mills or fake schools, indicating nothing about the quality of an individual institution.

When Congress returns from its recess next week, unfinished fiscal year 2008 education funding legislation will be high on the agenda. Fiscal year 2008 began on October 1 and funding subject to appropriations for the fiscal year has…

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We've reported extensively on the reconciliation bill passed by Congress earlier this month and its student aid provisions that shift taxpayer subsidies from lenders to students. But, like all major pieces of legislation that go through Congress, this one has a lot of moving parts, some of which have received…

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Hillary Clinton Includes Two New America Policy Proposals in Her Education Plan

Two New America policy proposals: required multi-year tuition levels and greater use of endowments to

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There's been discussion in Congress recently about how the tax code can be better used to encourage college attendance among low-income students. One proposal being considered by the Senate Finance Committee is to make higher education tax credits refundable - and thus available to people who now do not benefit…

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While the threatened showdown between Congress and President Bush over the College Cost Reduction Act never materialized, a different fiscal fight between the two branches of government is looming, this one over annual appropriations spending bills.

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The massive college aid bill that Congress passed earlier this month is headed to the President for signature. As the newest member of the Higher Ed Watch team and a budget hawk, I thought I would point out some of the loose ends that are going to have to be…

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Last week, Congress approved legislation that would transfer more than $20 billion over the next five years from over-subsidized banks to need-based student financial aid. The primary beneficiaries of the legislation are low- and middle-income students whose abilities to enroll in and complete college are restricted…

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Congressional Democrats took a bold step on Wednesday to fulfill their campaign promises: finalizing legislation that would cut the interest rate on federally subsidized student loans in half and provide a major boost to the maximum Pell Grant. The measure, which is expected to be approved in…

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