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Federal Policy Update: Student Financial Aid and TANF

Federal Policy Update: Student Financial Aid and TANF. Vickie Choitz, Senior Policy Analyst October 23, 2012 2012 NCWE Conference. Overview. Quick note on TANF Student financial aid in the federal budget Student financial aid and HEA reauthorization Student financial aid in the elections

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Federal Policy Update: Student Financial Aid and TANF

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  1. Federal Policy Update:Student Financial Aid and TANF Vickie Choitz, Senior Policy Analyst October 23, 2012 2012 NCWE Conference

  2. Overview • Quick note on TANF • Student financial aid in the federal budget • Student financial aid and HEA reauthorization • Student financial aid in the elections • How you can get involved

  3. Update on TANF • Sept. 30, 2010 reauthorization deadline not met; several extensions since then • Sept. 2012 Congress approved a six-month extension in the Continuing Resolution (expires March 2013) • Exempt from sequestration, but could be affected by any replacement budget deal • Welfare waiver guidance • Issued by HHS in July 2012 • Allows states to apply for waivers to experiment with alternative approaches to strengthen and increase employment outcomes, e.g., subsidized jobs and emergency benefits • House resolution disapproving it in Sept. 2012 • Senate not doing anything on it • ??? Future action is uncertain ???

  4. Student financial aid in the federal budget

  5. Pell Grants: Big Increase BUT New Equilibrium

  6. Rollercoaster funding for Pell

  7. Update on Pell Grants in Federal Budget – Review of Recent Changes • $13.5b INFUSIONas part of the Health Care and Education Reconciliation Act of 2010 (March 2010) • Elimination of “summer/year-round” Pell (2011 Continuing Resolution - April 2011) • $17b infusion (Budget Control Act - Aug. 2011); funding from elimination of in-school interest subsidy for graduate students and elimination of Direct Loan repayment incentives • More cuts (2012 Omnibus funding bill - Dec. 2011) • Decreased income limit for “auto zero EFC” from $32,000 to $23,000 • Reduced Pell lifetime eligibility limit from 18 to 12 semesters (retroactive) • Eliminated Ability to Benefit options

  8. President’s FY13 Budget Proposal (January 2012) Fund Pell Grants and New Programs • Fully fund Pell with no eligibility cuts (through FY 2014) • Initiatives to promote affordability, value, and completion: • Incentives in campus-based programs • New Race to the Top – College program • New First in the World Competition • Community College to Career Fund • Make American Opportunity Tax Credit permanent • Double # of work study jobs • Freeze subsidized Stafford loan interest rate at 3.4%

  9. House FY13 Budget Proposal (March 2012) Rollbacks and Cuts • Roll back Income Protection Allowances to 2008 levels • Roll back auto-zero EFC from $23,000 to $20,000 • Roll back definition of untaxed income • Eliminate eligibility when students are enrolled LTHT • Eliminate in-school administrative fees • Level fund maximum award at current $5,550 (no scheduled increase to $5,635) and eliminate mandatory portion of grant (including scheduled increases)

  10. House Appropriations Subcommittee on Labor-H FY13 bill (July 2012) 180º Opposite the March House Budget Proposal • Increase max Pell to $5,635 (this includes the “scheduled” $85 increase for the 2013-2014 school year) • Level fund other student aid programs (although few details) • No student aid eligibility cuts • Prohibit DoED from implementing State authorization and credit hour provisions

  11. Senate Appropriations Committee “Labor-H” FY13 bill (June 2012) Fund Pell and a Few Other Things • Restore ATB for career pathway students • Increase max Pell Grant by $85 to $5,635 (the “scheduled” increase) • Down payment on the FY14 ~$6 billion funding gap • Reform Federal Work Study and the Supplemental Educational Opportunity Grant (SEOG)  $ to lower-priced institutions that enroll and graduate higher numbers of Pell-eligible students; $150 million in new funds for enhanced work-study programs. • $39 million for the First in the World initiative • Level fund TRIO and Child Care Access Means Parents in Schools (CCAMPIS) • Eliminate aid for 100% distance ed students for expenses beyond tuition, fees, books, and supplies

  12. What’s the Quick Story on Pell? • Demand for Pell Grants: • Program enrollments have grown by 50% in last four years: 6.1m in 2008  estimated 9.6m in 2012 • Program costs have doubled: $16b in 2008  ~$34b in 2012 • 40% of growth is due to more eligible students as a result of the recession (and growing economic inequality) • Supply of Funding for Pell Grants: • Congress has not kept up with funding the program through annual appropriations; stop-gap funding and rushed eligibility and funding cuts • Stop-gap funds from 2012 run out at end of FY13  $6-7b funding gap in FY14

  13. Elimination of Ability to Benefit (ATB) • 2012 Omnibus funding bill (passed in December 2011) • Eliminates student aid eligibility for students without a high school diploma or equivalent, even if they can prove “ability to benefit” from college by: • Passing approved test • Passing six college credit hours • About 90,000 ATB students; disproportionately first generation, low-income, and minority • An estimated 31% of AtB students are Hispanic and 19% are Black – compared to 14% of all undergraduates who are Hispanic or Black • CLASP advocating for a reinstatement or exclusions • Sen. Murray championing a partial restoration of ATB • See CLASP fact sheets and guidance from Dept. of ED

  14. Note on SFA in the Sequestration • Federal Pell Grants are exempt from sequestration for 1 year • Federal Direct Student Loans – the origination fees on loans made under sequestration increase (OMB estimates by 7.6%) • All other federal student aid programs, e.g., campus-based programs, are subject to the sequester cut • Note: There is growing bi-partisan support to avoid the sequestration; Congressional lame duck session may result in an alternative budget deal – everything seems to be on the table

  15. Student financial aid and reauthorization of the Higher Education Act • Scheduled for 2013 (every 5 years) • Scope will depend on the election outcomes; acrimony in Congress will likely stymie progress • Likely issues: • College costs • Pell Grant • Student loans • Accreditation, state licensing (DoEDnat’l advisory cmte) • Program integrity and gainful employment • ?? Reform of campus-based programs • ?? eLearning/online programs • ?? Competency-based education

  16. Student financial aid and the election

  17. Pell Grants – How you can get involved • 2012 = 40th anniversary • Save Pell coalition • For individuals: sign up at www.savepell.org • For organizations: contact Vickie at CLASP • Save Pell fact sheets (posted at www.clasp.org) • CLASP forthcoming paper on importance of Pell Grants and other student aid to workforce and economy • Pellumni network • The Pell Institute’s commemorative publication • Documentary: “Pell Grants: A Passion for Education” • ATB – send us your #s and stories and share with members of Congress

  18. CLASP Save Pell webpage

  19. Thank You! Vickie Choitz Senior Policy Analyst 202-906-8048 vchoitz@clasp.org

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