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On August 2, 2011, the President signed the Budget Control Act of 2011 after weeks of debate on a plan to raise the debt ceiling. The Senate had approved the bill on August 2, 2011 by a vote of 74 to 26. The House had approved the bill on August 1, 2011 by a vote of 269 to 161. The plan averted a default in the United States’ financial obligations by increasing the $14.3 trillion statutory debt ceiling by $2.4 trillion.
Student aid programs are impacted by the Budget Control Act of 2011 as it provides for an additional $17 billion in funding over two years for Pell Grant funding in order to cover most of the current and projected shortfalls for this period. The funding is also needed to provide the current maximum $5,550 annual award. In addition, for fiscal years 2012-21, $18.1 billion of the savings will be achieved by eliminating the interest subsidy for subsidized Stafford Direct Loans for graduate and professional students. Finally, $3.6 billion in savings is achieved for FY 2012-21 by removing the authorization for the Secretary to provide on-time repayment incentives on Direct Loans (other than the incentive provided to a borrower who agrees to automatically debit electronic payments).
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On August 16, 2011, the House Committee on Education and the Workforce held a field hearing in Greenville, SC, to discuss the relationship between higher education and the local workforce. Both Congressmen Joe Wilson (R-SC) and Trey Gowdy (R-SC) chaired the hearing on “Reviving our Economy: The Role of Higher Education in Job Growth and Development.” Amy Hickman, Campus President of ECPI University, Greenville, SC testified on the importance of listening to the needs of the business community and including them in the development of programs that address employment needs. Other witnesses included Mayor Knox White, the mayor of Greenville, SC and representatives of the business community.
An excerpt of a joint op-ed authored by Subcommittee on Higher Education and Workforce Training Chairman Virginia Foxx (R-NC) and Congressman Trey Gowdy (R-SC) says that:
“As we work to build a stronger economy here in the South and across the United States, we must ensure prospective employees can effectively compete in the workforce—and that starts with providing students access to quality education.”
“There are few factors more important to reinvigorating our nation’s economy than education. Students gain invaluable skills and knowledge in the classroom that will be critical to success in the workforce.”
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A Federal Register notice of August 2, 2011 and an electronic announcement (#15) of August 2, 2011, established a due date of November 15, 2011 for the 2010-2011 award year gainful employment reporting to the Department of Education. The Department also stated that although the gainful employment information for 2006-2007, 2007-2008, and 2009-2010 award years are due by October 1, 2011, the Department will continue to accept information for these prior award years through November 15, 2011.
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The Congressional Research Service (CRS) has issued an analysis entitled “Federal Pell Grant Program of the Higher Education Act: Background, Recent Changes, and Current Legislative Issues” that provides an update on the student aid program following the funding changes contained in the “Budget Control Act of 2011.” The report outlines how the program works, provides information on its recent growth, and continued funding challenges.
The Pell Grant program recently experienced substantial increases in program costs, which are largely due to legislative changes that have led to increased benefits for more students, increases in the number of students enrolling in college and applying for Pell Grant aid, and a weakened economy. Consequently, these factors contributed to annual funding shortfalls in four of the last five years from FY 2007 to FY 2011.
Data from the report shows that the program provided an estimated $36.5 billion to approximately 8.9 million undergraduate students in fiscal year 2010 and constituted 25 percent of all federally supported student aid. The report states that the program garnered considerable Congressional attention in recent years. The report also pointed out that there is $17 billion in additional mandatory funds authorized under the “Budget Control Act of 2011” and $23 billion in discretionary appropriations to effectively maintain a $5,550 annual maximum award in the 2011-2012 award year.
Despite the influx in funding, the report concludes that “The Pell Grant program, which represents a significant public investment in higher education, may continue to present funding challenges and difficult policy choices for Congress in future years based on current eligibility parameters and projected demand.” It concludes that Congress may choose to further evaluate the effectiveness of and relative need for varied public investments in light of many competing priorities.
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President Obama established a goal for the nation that by 2020, the United States will have the highest proportion of adults with college degrees in the world. The American Institutes for Research (AIR) released a report that demonstrated that there are more immediate reasons to want more college graduates. “College graduates earn, on average, far more than college dropouts, and these higher earnings translate directly into higher income tax payments that can help solve growing fiscal problems at the federal and state levels.”
According to AIR, of the more than 1.1 million full-time students who entered college in 2002 seeking bachelor’s degrees, 493,000 did not earn a degree. For students who started in Fall 2002 as full-time students seeking a bachelor’s degree but failed to graduate six years later, the cost is approximately:
- $3.8 billion in lost income;
- $566 million in lost federal taxes; and
- $164 million in lost state taxes.
These estimated losses are for one year and for one class of students. Therefore, these estimates understate the overall costs to the nation. The full report is available on the American Institutes for Research website.
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A comparison of data from the Beginning Postsecondary Students Longitudinal Study (BPS) found that up to 40 percent of all Pell Grant dollars are going to students who do not complete any type of postsecondary degree program, according to a news analysis from ESM Chaperone, a policy analysis firm. Based on the BPS data, the analysis found that approximately 3.7 million new entrants to postsecondary education in 2003-2004, roughly more than 1.3 million had left school without returning by Spring 2009, an overall attrition rate of 35.5 percent. Of those who left school, almost half (47.6 percent), or about 642,500 students, had received at least one year’s worth of Pell Grant funding. The findings further show that one out of every four Pell Grant dollars were given to students who did not earn any postsecondary credential.
The report concludes “Notwithstanding the potential social returns to obtaining some postsecondary education without gaining a degree, spending upwards of $4.3 billion, or two out of every five Pell Grant dollars on students who remain high school graduates from the perspective of the labor market, seems remarkably high and suggests an unacceptably large amount of programmatic inefficiency.”
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The Department of Defense (DoD) recently made it a requirement that all institutions, accredited by an agency recognized by the U.S. Department of Education, enrolling Title X active duty military members using DoD military Tuition Assistance (TA) dollars, must have a Memorandum of Understanding (MOU) with the DoD. The MOU with the DoD articulates the commitment and agreements between postsecondary education institutions receiving TA funds and the DoD. The MOU ensures that all service members participating in off-duty postsecondary education programs are provided quality education programs uniformly. A signed MOU must be on the “List of Participating Institutions” effective January 1, 2012, to be eligible to receive TA funds.
All institutions that have a signed MOU with DoD will be included on the “MOU Participation Institution List,” which can be found on the DoD website and the MOU website.
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