Reauthorization: Analysis and implications of the new legislation

Reauthorization: Analysis and implications of the new legislation

Hartle, Terry W

Analysis and Implications of the New Legislation

of the Higher Education Act was successfully completed when President Clinton signed the Higher Education Amendments of 1998 into law last October. This bill was not the only major action of interest to college presidents completed by the 105th Congress. Indeed, by any yardstick, this was a remarkable Congress for colleges and their students.

But reauthorization is the most important single piece of legislation for two reasons. First. it establishes the framework of federal student aid for the next six years. More than 7 million students a year will get more than $40 billion annually as a result of this legislation. Without this aid, many students simply would not go to college.

More generally, any reauthorization highlights issues of concern to policy makers. In 1992, for example, Congress focused on student loan defaults and poor oversight of student aid by the Department of Education. This year, issues dominating the discussion were college costs, federal regulation, and teacher preparation.

A Perfecting Approach Federal higher education policy has changed dramatically in the 1990s. Both the 1992 reauthorization and the creation of direct lending proved difficult to implement. Thus, when the legislative process that would result in the 1998 reauthorization began in January 1997, the higher education associations hoped to avoid comprehensive changes in federal policy. Rather than major reforms, college and university officials recommended a “perfecting” approach.

While the higher education community suggested hundreds of specific changes, there were several overarching priorities. These included:

– Maintaining two student loan programs and letting schools choose which program to use.

– Improving the terms and conditions of loans for borrowers.

– Preventing federal intrusion into academic affairs.

– Maintaining the campus-based student aid programs.

– Modernizing federal processing of student aid.

– Avoiding federal price controls on tuition.

– Preventing any interference with college admissions.

When the bill cleared Congress, all of these goals were met.

What It Will Mean for You

The 267-page bill contains thousands of provisions. Of greatest interest to college and university presidents are those that deal with student aid and the relationship between institutions and the federal government. Ultimately, there are five major provisions (or groups of provisions) that are of particular importance.

First, the interest rate on student loans will drop. Thanks to a change in the formula used to calculate the interest rate, borrowers will pay less for student loans. In 1997, the interest rate on student loans was 8.23 percent. This year, thanks to the new formula, the rate fell to 7.46 percent.

The reduction will translate into savings for students in the same way that a lower mortgage interest rate saves money for a homeowner. For a student who borrows $12,000, the savings over the course of a ten-year repayment will amount to $ 600.

Second, federal intrusion into academic affairs has been reduced. In 1992, Congress created State Postsecondary Review Entities (the dreaded ” SPREs “), imposed federal responsibilities on accrediting agencies, and increased financial and administrative burdens on colleges and universities in an effort to cut loan defaults.

Reducing these intrusions was a high priority. Funding for SPREs was eliminated in the fiscal year 1997 budget, and the reauthorization terminated their legislative authority. They will not be missed.

In addition, Congress reduced the regulation of accrediting agencies. For example, accreditors will no longer be required by federal law to make unannounced site visits. Finally, the many financial reporting requirements imposed on colleges and universities in the last reauthorization were trimmed substantially. In short, while not all the intrusive requirements were eliminated, the 1998 reauthorization took a big step in the right direction.

Third, Congress increased regulatory flexibility and reduced the administrative burden imposed on colleges and universities. For example, changes in the federal refund policy will simplify the process of calculating how much money is owed to a student who withdraws. In addition, the new law establishes a system of “cures” that will allow colleges and universities to correct minor administrative, accounting, or record-keeping errors without penalty. Finally, any fines imposed on institutions for violating federal regulations must now be proportional to the violation.

An amendment to the Age Discrimination in Employment Act provides further flexibility. Under the new law, colleges and universities with defined contribution pension plans can offer tenured faculty members agebased, voluntary early retirement options. Previously, institutions that did this risked a lawsuit.

Fourth, unfortunately, while many regulations were reduced or eliminated, new requirements were imposed. Any reauthorization creates new regulatory burdens, and the 1998 bill is no exception. Thus, while Congress can (and will) claim that it has reduced regulation, it should (but will not) admit that it has simultaneously imposed new burdens.

Increased regulation results from a belief that colleges and universities “should” be doing more or less of a particular activity. The belief that colleges and universities should minimize tuition increases, for example, translates into a mandate that institutions provide extensive data on tuition to the Department of Education. Those that do not will be subject to a $25,000 fine. Other new (or expanded) requirements address drug use, licensure examinations for teachers, and campus crime. In addition, colleges and universities must now distribute voter registration materials.

In every case, the final provisions are less burdensome than the original proposals entertained by policy makers. In other words, it could have been worse. This is small comfort. Any way we look at it, federal regulation is about to increase.

Fifth, the reauthorization will increase the eligibility of students in distance education to participate in federal student aid programs. In 1992, Congress limited the eligibility of these students because of widespread fraud in correspondence schools.

As a result of the explosive growth in distance education, Congress has authorized a modest expansion of eligibility in this area. Under a demonstration program, the Secretary of Education is authorized to waive regulatory impediments to student aid eligibility for 15 postsecondary institutions,

Moreover, the Learning Anytime Anywhere Partnership (LAAP) program is designed to expand distance education programs, and several studies have been mandated to gather information and determine how to expand student participation without stimulating the abuses that characterized the programs a few years ago.

Several Issues Remain

At least three policy concerns that emerged last year will continue to command the attention of federal policy makers.

First, Congress will continue to watch college prices closely.

The thoughtful assessment by the National Commission on the Cost of Higher Education did not relieve congressional fears that the price of a college education was rising too fast and that colleges and universities were indifferent to public concerns.

Unable to determine how to restrain the increase in costs without resorting to price controls, Congress imposed new reporting requirements. The absence of more extensive action does not mean that Congress believes this issue has been resolved. To the contrary, at the conclusion of the reauthorization, the price of a college education remains the most volatile issue facing higher education in Washington, DC.

Second, Congress is deeply concerned about the quality of teacher preparation. The nation’s long effort to improve elementary and secondary schools has proven more difficult than expected. The search for federal policy solutions to this problem has begun to focus on the quality of new teachers, which has put colleges and universities on the firing line. The reasoning is simple: New teachers are college graduates, yet many prospective teachers fail state licensure examinations; therefore, colleges and universities are doing a poor job of preparing teachers.

Congress seriously considered cutting off federal student aid at institutions unless a federally specified percentage of students passed the state’s licensure examination. Ultimately, this idea was rejected, but states must now publish the pass rates of prospective teachers on licensure examinations.

Finally, another worrisome trend is the willingness of Congress to micromanage higher education. A distressingly large number of proposals were seriously considered at some point in the reauthorization that would have put the federal government in the business of overseeing matters that historically have been the clear and sole responsibility of colleges and universities.

For example, a federal law to discourage campuses from terminating fraternities and sororities was narrowly averted. An amendment sponsored by Congressman Frank Riggs (R-CA) that would have regulated college and university admissions was defeated on the House floor, as was a proposal that would have made it harder to discontinue intercollegiate athletic teams. Linking federal research funding to increases in tuition was also considered. Still another idea was a proposal to require federal reporting on the amount of contact between Professors and undergraduates.

Ironically, these proposals were put forward at the same time that both political parties were calling for reduced government intrusiveness. The problem is that while most policy makers want government to be less intrusive, many of the same people want to ensure that everyone enjoys a safe, clean, and fair personal environment, a tendency that journalist Jonathan Rauch has termed “microgovernment.”

Ultimately, microgovernment is especially problematic for colleges and universities because it threatens their long-standing tradition of institutional autonomy. For years, that autonomy has been trimmed back by decisions at both the federal and state levels. After reviewing the reauthorization of the Higher Education Act, one can only conclude that government intervention-despite rhetoric to the contrary-remains a serious threat.

The Never-Ending Policy Process

In public policy, there is no finish line. Thus, the end of reauthorization (while welcome) does not mean that campus officials can ignore Washington, much as they would like to do so. No reauthorization settles all the controversies, and some of the issues that remain under scrutiny-such as college costs and teacher qualityresonate strongly with voters.

Moreover, now that Congress has completed its work, the regulators in federal agencies will have their turn at bat. And regulators, sad to say, rarely find the simplest way to implement legislation.

The challenge for college and university officials is to build on the policy and regulatory improvements earned in the last Congress, while simultaneously addressing the issues still on the radar screen of policy makers. It’s a tall order.

1 Jonathan Rauch, “Tunnel Vision,” National Journal, September 19, 1998, pp. 2148-2153.

Copyright American Council on Education Winter 1999

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