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$20 billion in ed funding slashed from student aid legislation

Funding for an online course program was cut out of the final student aid bill.
$500 million in proposed funding to create open online courses was cut out of the final student aid bill.

In last-minute maneuvering designed to get the measure to pass, lawmakers eliminated $20 billion in proposed education funding from the student aid overhaul enacted by Congress last week—dampening enthusiasm for legislation that K-12 and higher-education officials had lobbied for over the past year. Of that $20 billion, $12 billion was slated for community colleges to boost graduation rates, partly through the development of open online courses, and $8 billion was pegged for an early-childhood education program.

Community college officials cheered the American Graduation Initiative (AGI) when lawmakers introduced the program last fall, but last-minute compromises and worries over the cost of the student aid bill forced legislators to eliminate the $12 billion set aside for AGI, observers said. The program aimed to help community colleges produce 5 million more graduates over the next decade.

AGI had included $500 million for an online skills laboratory modeled after Carnegie Mellon University’s Open Learning Initiative (OLI). The free, open internet classes were to be created by the Departments of Defense, Education, and Labor, according to a White House announcement.

Carnegie Mellon’s OLI courseware keeps tabs on what concepts students are grasping in their online work, and it lets professors tailor their lectures to help students in areas where they struggle. OLI officials said the program could raise college course completion by 25 percent.

A White House statement released in July said the federal open courseware program would allow students to “learn more in less time than they would with traditional classroom instruction alone.”

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AGI’s proposed 10-year federal investment in community colleges would have provided timely and welcome assistance. Two-year colleges have seen an unprecedented enrollment spike that has stretched their budgets, as more adults return to school in the midst of a recession that has forced states to cut their funding for these schools at the same time.

“It’s obviously not the ultimately desired solution,” said Jim Hermes, a spokesman for the American Association of Community Colleges (AACC). “But it was just one that was really forced by the larger circumstances in terms of how much money there was to put toward these certain [programs].”

Community college enrollment rose by 16.9 percent from fall 2007 to fall 2009, according to an AACC study. Full-time student enrollment jumped 24 percent in that same time, forcing some two-year campuses to hold classes during nights and weekends to accommodate record-size classes.

Two-year college enrollment jumped “more than in any other higher educational sector” between 2000 and 2006, according to research by the Brookings Institution, a Washington, D.C.-based nonprofit public policy organization.

Community colleges still will get $2 billion for developing or improving career training programs over the next four years. The final measure authorizes $500 million per year in competitive grants through fiscal 2014, through a program called the Community College and Career Training Grant Program. At least one institution in every state would be guaranteed at least $2.5 million in funding from the program.

The final version of the Student Aid and Fiscal Responsibility Act (SAFRA) also eliminated $8 billion for early-education initiatives. The funds were to create the Early Learning Challenge Fund, designed to spur competition for early-education providers.

“Obviously, this is a bitter disappointment to all of us who have been working on this bill since last summer,” said Cornelia Grumman, executive director of The First Five Years Fund, a Chicago-based organization that advocates for education programs for one- to five-year-olds. “We are looking forward to working with Congress and the administration to find another vehicle to fully fund this vital initiative. Today, our question to Congress is: What is Plan B for getting it done?”

Despite the changes to the final version of the lending bill, education organizations lauded major steps taken by Congress and supported by the White House.

The measure rewrites a four-decades-old student-loan program, eliminating its reliance on private lenders and using the savings to direct $36 billion in new spending to Pell Grants for students in financial need.

In spite of last-minute efforts by Republicans to derail the federal measure, Democrats on a party-line vote sent the higher-ed aid bill to the White House to be signed into law.

The legislation was paired with the expedited health-care bill, a marriage of convenience that helped the prospects of each measure.

“We are pairing this historic health reform with another opportunity that cannot be missed—the chance to make the single largest investment in college affordability ever at no cost to the taxpayers,” said Rep. George Miller, D-Calif.

Under the college lending program, financial institutions provide college loans at low interest rates, while the government guarantees the loans in the event of default and subsidizes private lenders when necessary to keep rates low.

“By moving to the federal government’s direct loan program, we will put the best interests of students first and make college loans more reliable and affordable,” said Rep. Ruben Hinojosa, D-Texas, the chairman of a House higher-education subcommittee.

In addition to using the projected savings from that change for Pell Grants and higher-education institutions, the legislation will direct about $19 billion for deficit reduction and to offset expenses in the health-care legislation.

Besides increasing Pell Grants, the law will provide $1.5 billion to make it easier for student borrowers to repay their loans.

Beginning in 2014, borrowers won’t be required to devote more than 10 percent of their monthly income to repay student loans. The current cap is 15 percent.

Still, the legislation is not as generous as the bill the House passed last year.

The bill had anticipated far more spending on community colleges and had called for increasing the Pell Grants each year by the consumer price index plus 1 percent. Democrats had to scrap the additional 1-percent increase.

Now, the law contains no increases in Pell Grants over the next two years and a modest increase over the five years that follow. The maximum Pell Grant, which a House-passed bill last year would have raised to $6,900 over 10 years, now will increase only to $5,900.

The current maximum grant for the coming school year is $5,500.

Mark Kantrowitz, publisher of the student loan web site and author of two books about student financial aid, criticized the $400 increase in Pell Grants in a blog post March 23. Kantrowitz, in an interview with eCampus News in February, said Congress would have to raise Pell Grants to $10,000 per student to increase the number of college graduates.

“The increases in the maximum Pell Grant are anemic,” Kantrowitz wrote. “Not only does this fail to keep pace with tuition inflation, but the maximum grant will decrease on a constant dollar basis.”

He added: “Current students will not notice much of a difference because of the legislation.”

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