Senate Democrats

S. 1642, the Higher Education Amendments of 2007

 Background and Summary

On June 20, 2007, the Committee on Health Education, Labor and Pensions (HELP Committee) approved S.1642, the Higher Education Amendments of 2007.  The legislation would reauthorize the Higher Education Act of 1965, strengthening many of its provisions and including new measures to rising college costs and address unethical practices in the student loan industry.  S.1642 would hold colleges accountable for rising costs by improving the availability and accuracy of information available to parents and students.  The legislation would also simplify the financial aid application process for all students, and would reform the student loan system so that it serves the best interests of students, not lenders.

Major Provisions

Addressing Rising College Costs

In order to hold colleges accountable for rising costs, S.1642 would:

·        Expand the information that the Secretary of the Department of Education (the “Secretary”) makes available to the public on an annual basis regarding college costs and academic programs. 

·        Direct the Bureau of Labor Statistics to work with schools to develop higher education price indices that accurately reflect annual change in tuition and fees for undergraduate students attending various types of institutions; and require the Secretary to report this information annually in both a national list and in separate lists for each state, broken down by type of institution.

·        Require the Secretary to create a Higher Education Price Increase Watch List, which would include a ranking of each institution of higher education whose tuition and fees outpace the applicable price index for institutions of its type.

·        Require the Secretary to work with institutions to develop model price calculators to help students and families determine the net price of attending a particular higher education institution.

Reforming the Student Loan System so that it Serves the Best Interests of Students, Not Lenders

S.1642 would implement a number of reporting and disclosure requirements to prevent lenders and colleges from exploiting the student loan system to the determent of students.  The bill would: 

  • Require educational institutions that enter into a loan arrangement with a lender to disclose the name of the lender in all documentation related to the loan provided under the arrangement; for purposes of this provision, a “loan arrangement” is an agreement between a lender and a higher education institution under which:  1)  the lender provides loans to the institution’s students; 2) the institution recommends or promotes the loans of the lender; and 3) the lender provides a fee or other benefit to the institution or its students.
  • Require lenders to provide students with a specific set of disclosures, in writing, before the lender may provide a student with an educational loan, including the following:
  • Clear statements of the interest rates of the educational loan being offered;
  • Sample educational loan costs, disaggregated by type, and for each type of loan being offered, the types of repayment plans that are available; 
  • Further information about terms and conditions of each loan;
  • Lender practices in cases of default;
  • Possible benefits of each loan and the percentage of borrowers who received such benefits in the preceding academic year; and
  • Whether the amount of all loans issued by the lender to the borrower exceeds the student’s cost of attendance.

·        Require lenders to report annually to the Secretary any expense paid to an employee of a higher education institution, such as expense paid for advisory board participation or professional development sponsored by lenders; the Secretary would be required to report this information to Congress annually.

·        Require the Secretary to prepare a report annually on the adequacy of the information provided to students and their parents about educational loans.

·        Require that higher education institutions establish, enforce and follow a code of conduct regarding student loans; the code of conduct would: 

·        Include a revenue sharing prohibition that would prohibit institutions from receiving anything of value from any lender in exchange for an advantage sought by the lender to make educational loans to a student associated with such institution. 

·        Prohibit an employee of the financial aid office at an institution from: 

1) taking from a lender a gift or trip worth more than nominal value, except for reasonable expenses associated with professional development; 2) entering into a consulting arrangement or other contract to provide services to a lender; and 3) receiving anything of value in exchange for serving on the advisory board, commission or group established by a lender or group of lenders, except for reasonable expenses incurred in serving on such a board. 

  • Impose the following requirements on institutions of higher education that choose to maintain a preferred lender list:
  • In establishing a preferred lender list, the institution must clearly and fully disclose why the institution has included each lender as a preferred lender, especially with respect to terms and conditions favorable to the borrower;
  • Indicate that students attending the institution (and the parents of such students) do not have to borrow from a lender on the preferred lender list; and
  • Establish a process to ensure that lenders are placed upon the preferred lender list on the basis of the benefits provided to borrowers, including highly competitive interest rates, high-quality customer service, or additional benefits.

Simplifying the Financial Aid Process for All Students

S.1642 would reform the Free Application for Financial Aid (FAFSA) by:

  • Immediately creating a new 2-page EZ-FAFSA for low-income students, and phasing out the current 10-page FAFSA for all applicants within five years; and
  • Facilitating student planning by creating a pilot program that allows students to receive an aid determination or estimate in their junior year of high school.

Strengthening TRIO to Improve Preparation for Higher Education

S.1642 would:

·        Require the Secretary to establish outcome criteria for measuring the quality and effectiveness of programs under TRIO:  Talent Search, Upward Bound, Student Support Services, Postbaccalaureate Achievement, and Educational Opportunity Centers programs.

·        Require the Secretary to measure the program’s delivery of services and secondary school enrollment and completion, postsecondary enrollment, academic performance, and completion outcomes for students served by the TRIO grant programs.

·        Require Talent Search programs to provide the following activities:  academic tutoring; assistance in selecting secondary courses and applying for college; information on and assistance in completing financial aid forms; guidance to high school drop outs; and services designed to improve student or parent financial and economic literacy.

·        Require Upward Bound programs to provide the following activities:  academic tutoring; assistance in selecting secondary courses and applying for college; information on and assistance in completing financial aid forms; guidance to high school drop outs; and services designed to improve student or parent financial and economic literacy.

·        Expand the permissible services component of Upward Bound to include programs for students with disabilities and those who are homeless or in foster care, in addition to those with limited English proficiency.

·        Require Student Support Services programs to provide the following services:  academic tutoring; assistance in selecting postsecondary courses, transferring from a 2-year to a 4-year program, or enrolling in graduate programs; information on and assistance in completing financial aid forms; and services designed to improve student or parent financial and economic literacy.

·        Require the Secretary to submit a report annually documenting the outcome data on the TRIO program’s delivery of services, participating students’ secondary and postsecondary school enrollment and completion, and academic performance.

Expanding and Improving the GEAR UP Programs

Changes to the Gaining Early Awareness and Access to Undergraduate Programs (“GEAR UP”) programs in S.1642 would include the following:

·        Grantees would be required to carry out the following activities:  provide information on financial aid to the populations they target; encourage student enrollment in challenging secondary coursework; support activities designed to lead to students graduating from high school and enrolling in institutions of higher education; and provide scholarships.

·        Grantees would also be permitted to use funds for tutoring, mentors, outreach, secondary and post-secondary support services, development or implementation of rigorous secondary curricula, dual enrollment, college visits, extended school day programs, or scholarships.

·        States would be given the option to promote additional activities, such as technical assistance to middle or secondary schools, professional development opportunities, strategies to increase postsecondary enrollment and graduation rates, alignment of secondary and post-secondary curricula and standards, alternatives to the traditional secondary school that provide a stronger link between high school and post-secondary options, drop out recovery programs, and dissemination of best practices.

Promoting Innovative Models in Teacher Preparation Programs

S.1642 would hold higher education institutions accountable for preparing teachers and promoting strategies to recruit and prepare qualified individuals.  Specifically, the bill would: 

·        Authorize the Secretary to award competitive grants which recipients would use to carry out a program for pre-baccalaureate preparation of teachers, a teaching residency program, or both.

·        Require that applications for these grants incorporate certain components, including the following:

·        A needs assessment and a description of the extent to which the teacher preparation program prepares new teachers;

·        An assessment of the resources available to the eligible partnership; and

·        An evaluation plan.

·        Require that evaluation plans include objectives and measure for increasing student achievement, teacher retention, improvements in pass rates on state certification and licensure, and the percentage of highly qualified teachers hired.

·        Require that all institutions of higher education that conduct teacher preparation programs and that enroll students receiving federal assistance must report the progress made towards specific measures.

  • Require states that receive these grant funds to have a procedure in place to identify and assist low-performing teacher preparation programs.   

Legislative History

S.1642, the Higher Education Amendments of 2007, was reported out of the HELP Committee on June 20, 2007, by a vote of 20-0.  At the same time it approved S.1642, the Committee also reported out related legislation, S.1762,the Higher Education Access Act, which would provide $17.3 billion in new financial aid to students paid for through reforms to the student loan industry.  On July 19, 2007, the Senate approved S.1762 by a vote of 78-18 as a substitute for the House Bill, H.R.2669

Pursuant to a consent agreement, there will be eight hours of debate on S.1642 the bill and any amendments thereto, with two hours of the time equally divided and controlled by Senators Kennedy and Enzi or their designees.  The time on any first degree amendment will be limited to 30 minutes equally divided and controlled, and there will be an additional 15 minutes equally divided and controlled for any second degree amendment.

 The only amendments in order other than the committee-reported substitute amendment are 12 first degree amendments which must be germane to the matter of

S.1642 or the committee-reported substitute, with six amendments for each manager and an additional managers’ amendment which has been cleared by the managers and the Leaders.  Second degree amendments are in order and must be relevant to the first degree amendment to which they are offered.

  Possible Amendments

The DPC will publish information on amendments when it becomes available.

Administration Position

As of the time of publication, the Bush Administration has not issued a Statement of Administration Policy regarding this bill.