U.S. Senators Zero In on Higher Education Regulatory Costs

U.S. Senator Lamar Alexander (R-Tennessee), Chairman of the Senate Health, Education, Labor, and Pensions Committee, has committed to finishing a rewrite of the Higher Education Act by the end of 2015, vocalizing strong support of a plan backed by colleges and universities that would reduce the burden of federal regulation on higher education.

At a Senate hearing on Tuesday, Vanderbilt University President Nicholas Zeppos said that complying with current federal rules and regulations cost his university nearly $150 million each year, or 11 percent of the university’s total non-hospital expenditures.

That figure comes from a new report illustrating the “jungle of red tape” American colleges and universities operate within.  The study was commissioned by Sen. Alexander along with Sens. Richard Burr (R-North Carolina), Michael Bennet (D-Colorado) and Barbara Mikulski (D-Maryland) and reinforces Sen. Alexander’s optimism that there will be a bipartisan effort to shape the act’s reauthorization to benefit both higher education and the taxpayer by providing appropriate, but not excessive, oversight.

Legislators plan to use the report as a “blueprint” to the reauthorization of the Higher Education Act.

“I have talked with Secretary Duncan more than once about this effort, and he is eager to do his part to solve the problem. I look forward to working with him and with the President on eliminating unnecessary red tape, saving students money, and removing unnecessary regulatory obstacles to innovation in the best system of higher education in the world,” Alexander stated.

President Obama on Higher Education

Last night, President Obama delivered his State of the Union Address to the nation.  As anticipated, the President proposed several higher education initiatives as part of his domestic agenda, referred to throughout the Address as his “middle-class economics” plan.

Here are some of the President’s proposals that relate to higher education:

Free community college
The President proposed eliminating tuition for community college for students who attend at least half-time and maintain a 2.5 GPA.  If passed by Congress, the proposal is estimated to cost $60 billion over the next decade.  More here.

Tax code changes
The President is proposing a number of changes to the tax code.  Those specifically related to higher education include the consolidation of tax benefits through a streamlined, permanent American Opportunity Tax Credit (AOTC) that would adjust with inflation.  Under current law, the AOTC is scheduled to expire after 2017.  This change would consolidate the Lifetime Learning Credit and the tuition and fees deduction into the AOTC and increase the refundable portion of the AOTC to $1,500.  Additionally, the proposal expands access to AOTC eligibility to part-time students and increases the number of years that families can claim the AOTC credit from four to five.  The President’s plan also calls for exempting Pell Grants from taxation and the AOTC calculation.

President Obama called for the consolidation of education savings incentives— redirecting those savings to increase the AOTC.  Specifically, the President’s plan rolls back tax cuts for 529 education savings plans that were enacted in 2001 for new contributions.  He also called for repealing tax incentives going forward for the Coverdell education savings program.

Other tax code items in the State of the Union that relate to higher education include:

  • Eliminating taxes on student loan debt forgiveness under Pay-As-You-Earn and other income-based repayment plans.  Currently, borrowers who choose to repay their student loans with Pay-As-You-Earn may face a tax bill when they qualify for debt forgiveness after twenty years of repayments.  The President’s plan proposes eliminating taxes on student loan debt forgiveness under Pay-As-You-Earn.  The Pay-As-You-Earn program essentially limits student loan payments to no more than 10 percent of discretionary income and provides qualification for loan forgiveness after 20 years.
  • Repealing the student loan interest deduction for new borrowers.  The President’s plan repeals the student loan interest deduction for new borrowers only—maintaining the deduction for current borrowers.  According to the White House, the deduction “provides very limited assistance ($100 on average) to a broad group of borrowers,” and many eligible borrowers fail to claim it.  The President’s plan would direct savings from this proposal to his proposed increased American Opportunity Tax Credit.

The Tennessee Delegation Responds

Republican Senator Lamar Alexander, Chairman of the Senate Committee on Health, Education, Labor and Pensions issued the following statement:

“Unfortunately, much of what I heard from President Obama tonight are partisan proposals that don’t have any chance of becoming law – and that he intends to pursue despite the message the American people sent him in November by electing a Republican Congress.  We need to hear more about proposals that Congress might actually work on with the president: to expand free trade so we can sell more Tennessee products overseas, simplify student aid forms so more community college students can take advantage of Tennessee Promise, preventing cyberattacks and fixing No Child Left Behind.  I’d like to hear talk more about 21st-century cures, helping to get treatments, medical devices and medicines through the U.S. Food and Drug administration more rapidly, which would help virtually all Americans. This is something that both Republicans in Congress and the president believe is important.”

Republican Senator Bob Corker, Chairman of the Senate Foreign Relations Committee, stated:

“Tennesseans are ready for both the Congress and the White House to govern responsibly and finally focus on growing our economy, repairing our fiscal house and strengthening our nation’s role in the world. It is my hope the President will recognize that the only way to solve some of the big issues we face and create a stronger, more prosperous nation for future generations is to roll up his sleeves, provide leadership and work with this new Congress. If he does that, I think we can begin to deliver real, long-lasting results for hardworking American families.”

For a more comprehensive roundup of responses, click here.

White House Picks UT to Lead National Composites Manufacturing Institute

Watch the announcement by clicking play on the video below.

President Obama will announce today that the University of Tennessee, Knoxville, will lead the Institute for Advanced Composites Manufacturing Innovation, or IACMI, a $259 million public-private partnership. The Institute reflects a $70 million commitment from the U.S. Department of Energy and $189 million from IACMI’s partners.

Supported by the Department of Energy’s Advanced Manufacturing Office in the Office of Energy Efficiency and Renewable Energy, IACMI joins four other institutes backed by the Obama administration in a recent push to accelerate advanced manufacturing.

The selected team, a 122-member consortium, connects the world’s leading manufacturers across the supply chain with universities and national laboratories pioneering advanced composites technology development and research.

Established as a nonprofit 501(c)(3) in Tennessee by the UT Research Foundation, IACMI has received a $15 million commitment from the Tennessee Department of Economic and Community Development as part of an effort to facilitate breakthroughs in manufacturing and materials.

“This project places the university and its partners in a unique position to strengthen Tennessee’s economy,” said UT Chancellor Jimmy G. Cheek. “We are very honored to have been selected for this role in shaping the future of composites manufacturing through IACMI. This will build upon our deep collaborations with our consortium partners and spark innovation and growth within our nation’s industries.”

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President Obama Unveils Free Community College Proposal

President Obama announced last night on social media his plan to make community college free for “everybody who is willing to work for it.”  The plan, named “America’s College Promise,” is largely inspired by the Tennessee Promise passed last session and proposed by Governor Bill Haslam.  The President will be making a formal announcement regarding the proposal today at Pellissippi State Community College in Knoxville, Tennessee.

To become law, the plan would have to win Congressional approval.  The estimated cost, according to Deputy White House Press Secretary Eric Schultz, is roughly $60-billion over ten years.

The White House has stated that if all states participate, an estimated 9 million students could benefit.  A full-time community college student could save an average of $3,800 in tuition per year if they attend at least half-time and maintain a 2.5 GPA.

Under President Obama’s proposal, federal funding would cover three-quarters of the average cost of community college. States that choose to participate would be expected to contribute the remaining funds necessary to eliminate community college tuition for eligible students. States that already invest more and charge students less could make smaller contributions, though all participating states would be required to put up some matching funds. States would also be required to continue existing investments in higher education; coordinate high schools, community colleges, and four-year institutions to reduce the need for remediation and repeated courses; and allocate a significant portion of funding based on performance, not enrollment alone (performance-based funding was enacted in Tennessee in 2010).

States will have flexibility to use some resources to expand quality community college offerings, improve affordability at four-year public universities, and improve college readiness, through outreach and early intervention.

For more information, you can view the White House Fact Sheet here.

To watch the President’s announcement today at 1:20 p.m. EST, click here. 

Bipartisan Group of U.S. Senators Introduce Bill to Cut 108-Question Student Aid Form to 2 Questions

Bill introduced by Alexander, Bennet, Burr, Booker, Isakson, King will simplify financial aid application for 20 million Americans who fill it out each year

Senators Lamar Alexander (R-Tenn.) and Michael Bennet (D-Colo.) with Senators Richard Burr (R-N.C.), Cory Booker (D-N.J.), Johnny Isakson (R-Ga.), and Angus King (I- Maine) introduced the FAST Act yesterday, a bill to simplify the process of applying for and receiving federal financial aid to attend college, allow year-round use of Pell Grants, discourage over-borrowing and simplify repayments.

The bill would reduce to a single postcard—called the “Student Aid Short Form”—the questions 20 million Americans must answer to apply for federal financial aid each year and inform high school students in their junior year of the amount they’ll receive in federal aid to help pay for college. It would also address the problem of some students borrowing too much money, and simplify the options students have to repay their federal loans.  The act also streamlines federal grant and loan programs to better serve more students more effectively.

“Every year, millions of students are discouraged from applying for financial aid by an unnecessarily complicated, 108-question form. This bill would cut those questions down to two, and help families get aid information sooner, while protecting taxpayers from lending more money to students than they’re able to repay,” Senator Alexander said.

The senators said that they want to be certain that the short form sends taxpayer dollars solely to those eligible, and so would reduce the form to as close to two questions as possible without creating an opportunity for fraud or abuse.

The Financial Aid Simplification and Transparency Act, or FAST Act, would simplify the federal financial aid process by:

  1. Eliminating the Free Application for Financial Student Aid, or FAFSA: The bill would reduce the 10-page form to a postcard that would ask just two questions: What is your family size? And, what was your household income two years ago?
  2. Telling families early in the process of what the federal government will provide them in a grant and loan. The bill would create a look-up table to allow students in their junior year of high school to see how much in federal aid they are eligible for as they are start to look at colleges.
  3. Streamlining the federal grant and loan programs. The bill would combine two federal grant programs into one Pell grant program and reduce the six different federal loan programs into three: one undergraduate loan program, one graduate loan program, and one parent loan program.
  4. Enabling students to use Pell grants in a more flexible manner. The bill would restore year-round Pell grant availability and provide flexibility so students can study at their own pace. Both provisions would enable them to complete college sooner.
  5. Discouraging over-borrowing. The bill would limit the amount a student is able to borrow based on enrollment. For example, a part-time student would be able to take out a part-time loan only.
  6. Simplifying repayment options. The bill would streamline existing repayment programs and create two simple plans, an income based plan and a 10-year repayment plan.