Late last week we released an Alert entitled,”Congress and the Higher Education Act: what’s on the table? What’s to come? Our look at the major proposals,” which summarizes our views on where things stand legislatively in higher education.   In it we try to do some trend spotting while summarizing the various bills out there dealing with higher education, as well as review the proposal from Budget Committee Charmian Paul Ryan, who issue a detailed paper on his proposed reforms, albeit not in formally introduced legislative language.  There is a lot out there and as you would imagine, we had to condense things a bit.  As a result, we will be releasing our somewhat longer summaries on the blog, in case you are interested. Today, we turn our attention to two Senate bills, one from the outgoing Chairman of the Committee on Health Education Labor and Pensions (HELP) and one from the current Ranking Member of that committee – who will likely be the Chairman is the Republicans take control of the Senate.

Higher Education Affordability Act

On June 25, 2014, retiring HELP Committee Chairman, Senator Tom Harkin (D-IA) introduced the “Higher Education Affordability Act” as a discussion draft for an eventual committee markup.  To date, it does not appear there has been a markup on this bill.

As mentioned in the Alert, the bill would amend the Higher Education Act in ways that the Chairman believes will counteract the rising costs of college education.  The proposal focuses on increasing college affordability, helping struggling borrowers, strengthening accountability, and improving transparency.

Some key provisions would:

  • Reinstate year-round Pell Grants.
  • Eliminate federal Direct loan origination fees.
  • Expand dual enrollment and early college high school education programs.
  • Streamline repayment into a single income-based option.
  • Automatic enrollment of delinquent borrowers into an income-based repayment plan.
  • Allow private student loans to be discharged in bankruptcy.
  • Require schools to make better disclosures on important information like loan repayment rates
  • Change the 90-10 rule for for-profit institutions to an 85-15 rule.
  • Explore risk-sharing for low-performing schools, holding them financially accountable for student outcomes.
  • Prevent federal funding from being used on advertising and marketing.
  • Provide information on federal aid eligibility in middle and high school.
  • Standardize financial aid award letters.
  • Create and strengthen entrance and exit loan counseling programs.

Financial Aid Simplification and Transparency (FAST) Act

On June 18, 2014, HELP Committee Ranking Member, Senator Lamar Alexander (R-TN) – the presumptive Chairman of the HELP Committee if the Republicans take control of the Senate – together with fellow HELP Committee member, Senator Michael Bennet (D-CO), released the Financial Aid Simplification and Transparency (FAST) Act, a draft bill that, among other things, “simplif[ies] the process of applying for and receiving federal financial aid to attend college.” This bill also has yet to be formally introduced.

The bill would:

  • Reduce the 10-age FAFSA to only two questions: what is your family size, and what was your household income two years prior?
  • Streamline the Pell Grant into a single program  based solely on the new FAFSA question criteria.
  • Streamline loans into a single Federal loan program based upon the new FAFSA question criteria
  • Reinstate the year-round Pell Grant program
  • Two Loan Repayment Options: a 10-year fixed payment plan or a 20-year income-based repayment plan at 10% of income.
  • Require the Secretary of Education to give information about financial aid eligibility to middle and secondary schools where at least 25% of students are eligible for free and reduced price lunches.