federal legislative update and coheao perspectives coheao annual conference arlington, virginia
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Federal Legislative Update and COHEAO Perspectives COHEAO Annual Conference Arlington, Virginia January 28, 2013 Harrison M. Wadsworth III Executive Director Coalition of Higher Education Assistance Organizations Principal, Washington Partners, LLC [email protected] 202-289-3910. - PowerPoint PPT PresentationTRANSCRIPT
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Federal Legislative Update and COHEAO Perspectives
COHEAO Annual ConferenceArlington, VirginiaJanuary 28, 2013
Harrison M. Wadsworth IIIExecutive Director Coalition of Higher Education Assistance Organizations Principal, Washington Partners, LLC [email protected] 202-289-3910
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Presidential Inauguration 2013
The 113th Congress
House • 232 Republicans• 200 Democrats
• Vacancy in Illinois filled Feb. 26 – Safe D; Vacancy in SC: Safe R
Vacancy in MO: R• Previous Congress at
its end:• 241 Republicans• 190 Democrats• 4 Vacancies
Senate*• 55 Democrats*• 45 Republicans• Current Congress:
• 53 Democrats• 47 Republicans
* Dems now and next year include two independents who caucus with D’s
Senate HELP Committeeo Health, Education, Labor &
Pensions Com.New Democrats: Tammy Baldwin (WI)
Chris Murphy (CT)
Elizabeth Warren (MA)
Senate HELP Committeeo Health, Education, Labor &
Pensions Com.New Republican: Tim Scott (SC)
Senate HELP Committee Leadership
o Health, Education, Labor & Pensions Com.• Tom Harkin (D-IA) Still Chairman, Still
Chairs Appropriations Subcommittee on Labor, HHS, Education
o New Ranking Republican…
6Lamar Alexander (R-TN) Mike Enzi (R-WY)replaces
House Education & Workforce Leadership: No changes
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Chairman Kline (R-MN)
Higher Ed SubcommitteeChairwoman Foxx (R-NC)
Ranking Dem. Miller (CA)
Higher Ed Subcommittee Ranking Dem. Hinojosa (TX)
Ed and Workforce New Members
RepublicansMatt Salmon, AZ Susan Brooks, INRichard Hudson, NC Luke Messer, INJoe Courtney, CT Brett Guthrie, KY DemocratsJared Polis, CO Gregorio Sablan, MIJohn Yarmuth, KY Frederica Wilson, FLSuzanne Bonamici, OR Marcia Fudge, OH
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Subcommittee on Higher Education and Workforce
TrainingRepublicans Democrats
Virginia Foxx, North Carolina(Chairwoman)Thomas E. Petri, WisconsinHoward P. “Buck” McKeon, CaliforniaGlenn Thompson, PennsylvaniaTim Walberg, MichiganMatt Salmon, ArizonaBrett Guthrie, KentuckyLou Barletta, PennsylvaniaJoseph J. Heck, NevadaSusan W. Brooks, IndianaRichard Hudson, North CarolinaLuke Messer, Indiana
Rubén Hinojosa, Texas (Ranking Member)John F. Tierney, Massachusetts Timothy H. Bishop, New YorkJohn Yarmuth, KentuckySuzanne Bonamici, OregonCarolyn McCarthy, New YorkRush Holt, New JerseySusan A. Davis, CaliforniaDavid Loebsack, Iowa
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Elections: Some Perkins Champions Do Well (on a
Bipartisan Basis)o Rep. Cathy McMorris Rodgers (R-WA) now GOP Conference Chair
o Rep. Tim Bishop (D-NY) won and remains leading voice among House Dems
o Rep. Jaime Herrera-Beutler (R-WA) gets Appropriations Committee
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The Fiscal Cliff: Some Key Players
Stepping Back From the Fiscal Cliff
Massive tax increase averted, saving economy from recession and stock market from depression
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Oops
13One tax increase went through for all who work: FICA up 25% + other increases for people making over $250K
For Those Who Prefer to Pay Less Tax
Made Permanent (or at least until Congress changes them again):o Lower “Bush” marginal federal
income tax rates for vast majority of taxpayers
o Expanded Coverdell Education Savings Accounts
o Exclusion for employer-provided educational assistance
o Student loan interest deduction o The exclusion from income of
amounts received under certain scholarship programs
o Tax-exempt private activity bonds for qualified education facilities
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More Happy Tax News…
The following provisions were temporarily extended: o The American Opportunity Tax
Credit (5 year extension)o The above-the-line deduction for
qualified tuition related expenses. (2 years: 2012 and 2013)
o The deduction for certain expenses of elementary and secondary school teachers. (2 years: 2012 and 2013)
o Tax credit for research and experimentation expenses. (2 years: 2012 and 2013)
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“Sequestration” Plus Spending Caps
o Budget Control Act of 2011 set in law discretionary spending caps for 10 years (FY ‘12-FY ’21)
o Supercommittee failure triggered sequestration unless the law is changed. o$1.176 trillion in automatic
cuts between FY 13-21. (Cuts reduced $24 billion in 1/1/13 deal)
o50% from defense, 50% from nondefense programs.
o FY 13 cuts now start on March 1, 2013.
o Education cuts start July 2013.
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Sequestration for 2013 Still Major Education Cuts
o FY 13 = fixed percentage across-the-board cuts.• “Cliff” deal of 1/1/13 reduced 2013
cuts to $83 billion – 5.1% for discretionary
• Pell grants exempt in first year only.
• Loan origination fees up 5.1% to 1.05% for Stafford and 4.2% for PLUS
• Cuts to SEOG, GEARUP, TRIO, Work Study
• Cuts to NIH, NSF, NEH, DOE, other research
o FY 14-21 – lowers discretionary caps instead of across the board cuts• Squeezes education $$; Pell no
longer exempt.
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FY 13 Education Appropriations Report
o Senate Appropriations FY 13 Labor-HHS-ED bill, S. 3295, reported on 6/14: • Modest increase in ED = $408 million (+0.6%)• Most programs frozen; few increases (Title I,
Promise Neighborhoods, STEM, IDEA, )o House Appropriations Subcommittee
reported bill on 7/18: • Cuts ED by $1.1 billion (-1.6%);
eliminates RTTT, SIG, I3, but increases IDEA by $500 million.
o Nothing Passed However – 6 Month CR ends March 27 – then what???
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Get Ready for Shutdown 2013
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Reality Checko Congressional Republicans
strategically retreated on taxes (not very far) and for now on the debt ceiling (it is a loser of a political issue – just ask Newt Gingrich)
o Spending is the target!o “We don’t have a trillion-dollar
debt because we haven’t taxed enough; we have a trillion-dollar debt because we spend too much.” — --Ronald Reagan, March 28, 1982, and since paraphrased numerous times by Republican leaders.
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Aren’t
We F
orge
tting S
ometh
ing??
?
Pell/Student Aid Cuts Already Enacted
o Eliminated the interest subsidy for graduate student loans and for the six-month grace period for undergrads for two years;
o Limited to 150% of program length the period an undergrad can receive a subsidized Stafford loan;
o Eliminated summer Pell and reduced to 12 the number of semesters a student can receive a grant;
o Eliminated ATB and made it more difficult for some low-income students to automatically qualify for the maximum Pell grant; and
o Cut eligibility for the minimum award.
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Pell/Student Aid Cuts Enactedo College students have
contributed $4.6 billion out of their pockets to deficit reduction.
o 145,000 students have lost their Pell grant.Pell grants faces a $6-8 billion shortfall in FY 2014.
o Maintaining Subsidized Stafford interest rates also costs roughly $6 billion per year
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Student Aid and the Future o Is remaining Stafford Loan
subsidy for undergrads soon to be an “offset?”
o Are fixed interest rates done?o Back to the future: variable
rates?o Pell shortfall and doubling of
subsidized Stafford interest rates loom soon
o How to pay for it?o Mini-reauthorization in 2013?
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College Cost: Bipartisan Concern
o “College Price Increases out of control”
o “Student Loan debt burden excessive”• Debt “bubble?”• Whose fault is it?• Something must be done!
o Colleges Are Targeted for “something”
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College Prices and Costso Obama campaign highlighted cost of
college• Full PR campaign launched with
allies in consumer groups, blogs, other media, CFPB
• Promised to halve the rate of HE price increases
o Risk sharing by collegeso Obama will push already announced
initiatives, including campus-based program changes
o But…Congress needs to go along for anything big to happen
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President’s Plan: Use Campus Based Programs to
Control College Costso “Address rising college tuition costs” by
"rewarding colleges and universities that act responsibly in setting tuition, providing the best value, and serving needy students well.”
o Proposal: new “Unsubsidized Perkins Loan” program now with up to $8.5 billion in loan volume (was $8 bil).
o Current Perkins volume is about $1 billion a year.
o Like previous proposals, ED would originate and service Perkins Loans, which would look the same to students as Unsubsidized Stafford Loans:
o Congress: Not the least bit interested o Using “Fair Value Accounting” it costs
the government $7.2 billion over 10 years – Republicans favor FVA
Value of Traditional Education Questioned Like Never Before
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Ongoing Student Loan/Higher Education Consumer Issues to
Monitor in the 113th o HEA—will it happen? Mini Reauth in
2013?o CFPB, particularly interaction with ED
• Shopping sheet• DL servicers?• Re-fi market?• Private loan servicing standards? • Federal loans? (tug of war with ED?)
o Loan repayment and federal loan servicing• Is IBR a panacea?• Complexity an ongoing issue
o PLUS Loans30
The Perkins Picture 2012:o No funds appropriated for
Perkins in FY2012 because President didn’t ask for them AND Pell Grant shortfall sucked up too much cash
o BUT: the Perkins Loan Program continues at least through FY 2015, and the Department advises that schools should make as many loans as possible
o Can Transfer Funds from Work Study
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Moving Beyond Perkins: Some More Key COHEAO Issues
o Consumer Financial Protection Bureau
o Bankruptcy Law Changeso Private Loan Issues/CFPBo Telephone Consumer Protection
Act• Coalition Continues – maybe next
year for action on autodialing to cell phone restrictions
o Financial Literacyo Other AR issues
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CFPB o CFPB here to stay, all agreeo Leadership in Question
• Date departing on January 31, Cordray may return to Ohio to run for Gov.
o Elizabeth Warren on Senate Banking and HELP Committees
o For student loans, interaction with Direct Loans something to monitor
o More on CFPB later in Conference
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Bankruptcy Law Proposalso Current law: all education loans
as defined by tax law are dischargeable in bankruptcy when there is undue hardship to debtor or dependents• Recent study: very few try to
discharge, thinking it’s impossible, but it’s not!
o Calls for dropping undue hardship requirement for private loans only
o Government loans would remain non-dischargeable including from any “government units”
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Telephone Consumer Protection Act
o Joint reform effort thwarted when 49 state AGs opposed bi-partisan Terry-Towns bill allowing more calls to cell phones.• Primary reason: pre-emption,
telemarketingo Alliance for Mobile Information:
New coalition led by US Chamber of Commerce to continue the reform effort to permit use of auto-dialers to call cell phones
o Action will most likely happen next year (hopefully).
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COHEAO Goalso Federal Perkins Loan Program
• Restore Cancellation Appropriation• Advocate for Perkins Capital
Contribution• HEA Reauthorization – proposals in
2013
o Negotiated Rulemaking - 2013• Financial Aid Fraud• Regulatory changes related to
Campus issued Bank Cards• Analysis of Campus-Based Program
Regulations – Update and Streamline
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COHEAO Goalso Financial Literacy
• Collect and share best practices in developing financial literacy programs on campus
• Monitor activities related to financial literacy legislation or oversight
• COHEAO Financial Literacy Webinar – coming soon!
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COHEAO Goalso Accounts Receivable
Act as a forum for discussion and sharing of best practices on issues related to:• Collection Regulations on Campus Debt• TILA – as related to Tuition Payment Plans• Institutional Loans (disclosure
requirements)• TCPA – (predictive dialers used for
collection on campus A/R and institutional loans)
• Bankruptcy (private loans/impact)• VA/Military Issues 38
COHEAO Goalso Consumer Financial Protection
Bureau• Continue to stay engaged with the
Bureau• Be recognized as a key
representative on issues related to A/R, loan disclosures, and collection agencies
• Respond to requests and inquiries by the CFPB
• Monitor activities and educate COHEAO membership on CFPB related legislation and practices as it impacts their activities
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COHEAO Goalso Telephone Consumer Protection
Act• Monitor legislative action• Participate with the TCPA Alliance
to facilitate legislative change• Work with other National
Organizations such as NACUBO to recommend solutions
Assert ourselves – with your help!
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Bye for Now!