Tuesday, July 21, 2009

House Committee Passes Student Aid and Fiscal Responsibility Act of 2009

Today, the House Education and Labor Committee led by Chairman George Miller (D-CA) passed H.R. 3221, the “Student Aid and Fiscal Responsibility Act of 2009,” by a 30-17 vote. The bill eliminates the Federal Family Education Loan Program and originates all new federal student loans through the Direct Loan Program starting in 2010. In total, this conversion generates $87 billion in savings. While there were a number of amendments offered and debated, the intent of the bill and the funding levels for Pell Grants, community college modernization and President Obama’s American Graduation Initiative (no significant changes to the community college programs) were left unchanged.

The bill provides significant funding increases in two key areas:

  • Investing $40 billion to increase the annual Pell Grant maximum to $5,550 in 2010 and to $6,900 by 2019. Starting in 2010, the maximum will be linked to match rising costs-of-living by indexing it to the Consumer Price Index plus 1 percent; and
  • Providing $9.5 billion for President Obama’s American Graduation Initiative, with $2.5 billion in FY2011 for community college infrastructure and $7 billion (over ten years) for competitive grants to community colleges and states. The funding is broken down to three distinct programs:
    1. 2.5 billion in FY2011 for grants to community colleges to modernize,
      renovate, and repair their facilities.
    2. $6.3 billion over ten years for community college and state competitive
      grants. The first four years are geared towards community colleges and
      states. The remaining six years are targeted towards states. Prior
      to the markup, ACCT worked to include language within the state grant program
      stipulating that no less than 90% of funds to states be allocated to community
      colleges.
    3. $700 million for competitive grants for national activities, including
      grants to develop free online training and courses.

Additionally, the funds other programs including:

  • Providing $3 billion to bolster college access and completion support programs for students;
  • Strengthening the Perkins Loan Program;
  • Keeping interest rates low on need-based – or subsidized – federal student loans by making the interest rates on these loans variable beginning in 2012. These interest rates are currently set to jump from 3.4 percent to 6.8 percent in 2012;
  • Simplifying the FAFSA form;
  • Providing $2.5 billion for Historically Black Colleges and Universities and Minority-Serving Institutions;
  • Providing $8 billion for Early Learning Programs; and
  • Providing $10 billion to pay down the federal deficit.


With the Committee process complete, the bill has been referred to the House Budget Committee. There is some discussion about bringing the bill to the floor next week. Meanwhile, the Senate is expected to consider its budget reconciliation bill in early September.

To see the letter of support for H.R. 3221 by ACCT and AACC, visit: http://www.acct.org/Final%20HR3221Support%20Letter.pdf

For more information visit: http://edlabor.house.gov/newsroom/2009/07/legislation-to-make-landmark-i.shtml

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