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Legislative Update
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Karen Fooks, SASFAA Legislative Chair, just returned from the NASFAA Reauthorization Task Force Meeting, where they heard comments from various DC players including ACE, NCHELP, CBA, IHEP and hill staffers from both the House and Senate. I will be sending another request shortly seeking your input as to issues that you want to see addressed in the reauthorization/legislative process, especially since the Congressional calendar has been put on a faster track. Please be prepared to give me input. Listed below are Karen's comments from the meeting:

The most important thing The Congressional calendar for reauthorization is on a faster track than anyone anticipated and this will mean the aid associations may need to readjust their thinking as well. NASFAA's timetable was to have the Board of Directors approve their position at the April '03 Board meeting. Now it looks like the NASFAA position will need to be ready by the end of Dec '02, which means that state and regional associations will need to ramp up their calendars for putting their own position papers together or have input in to NASFAA's. The Congressional staff indicated that public hearings might begin this Fall, a call for formal input the beginning of '03 and a draft bill (in the House anyway) by Spring '03.

Frankly, I think the entire reauthorization process will be just as slow as it always is to finish and we probably won't have legislation until sometime in '04 but it was made pretty clear that if you want your positions to be considered when the bills are marked up, you'd better be ready before the end of this year.

Reauthorization Climate
Pretty much all speakers agreed on the following:

1. The current economic climate is going to make this reauthorization a difficult one in terms of innovation and finding the money to do a lot. With the federal budget expected to be in a deficit for the next few years, everything will probably have a cost figure attached to it and we will have to do a lot of trading off.
2. The mid-term elections in November will play a role, particularly if the House or Senate changes party control, but neither party is expected to have sufficient numbers to control the agenda without bipartisan cooperation.
3. The administration focus will be on accountability. There is a perception that they can do in Higher Ed what they have done in K-12, that is, focus on student academic achievement, national standards and graduation/retention outcomes. Everyone expects that there will be considerable emphasis on institutional grad/retention rates and much more monitoring and reporting. Coincidentally, I see that Joe Lieberman made similar comments in a recent public address so there might be bipartisan support for this concept.
4. Homeland security & the war will result in greater controls/reporting of our international students.
5. College costs will continue to be at the top of the public agenda.

Key Issues

1. Loan limits - there seemed to common agreement that this needs to be addressed and that they are too low, particularly for lower division students and perhaps medicine/HP. However, this is a major cost item and the Congressional staffers indicated that this may be a budget buster and will be difficult to change. The United States Student Association has also "drawn a line in the sand" and is opposed to increasing loan limits. They will be a tough constituency to fight against.
2. Elimination of origination and guaranty fee. Ditto the loan limit cost problem except that students are in support of this.
3. Pell as a true entitlement - Viewed as unrealistic in current economic climate
4. Campus-based allocation formula - everyone agrees it's seriously flawed but the politics are such that, "where you stand depends on where you sit" and the "haves" will fight not lose share to the "have nots". Will be addressed but will likely not get past the politics.
5. R2T4 - everyone agrees it needs to be fixed. No one knows how. Congress wants a community consensus proposal and is unlikely to offer a solution unless we come forward with it.
6. FFEL/Direct Loan--no one seems interested in a fight on this issue and there will likely not be any community recommendations to eliminate DL, including from the lending community. No one knows, however, what the Administration proposal will be.
7. 529 plans--general agreement that need analysis provisions need to be looked at to provide more consistent treatment between various education savings/pre-paid tuition plans. Likewise general agreement to consider all VA benefits similarly.

Non-Reauthorization Issue Status of 30-Day Delay/Multiple Disbursements in a Single Term Waivers for Low Default Schools

Again, all associations and Congressional staffers were aware of the problem and the need to extend the deadline (these waivers expire 9/30/02). However, there is no clear plan how this is going to be fixed or when or if. There is a cost to extending the waiver ($70 million I think someone said) so there will need to be offsetting cuts elsewhere or new revenue. There does not seem to be a good piece of legislation coming up to hang it on to. Rep. McKeon intends to have his Fed Up bill introduced this summer but it is likely to be mostly technical in nature and fixing "nits". He does not want anything controversial on it that would delay passage. Also there is currently no companion legislation planned in the Senate.

It could possibly be attached to an emergency appropriations bill which would solve the cost problem since emergency appropriations are not subject to those constraints but when/if there will be one is uncertain.

George Conant (House education committee staff) indicated that if a bill with the loan provision extension isn't passed by June, it isn't likely to be. Dallas and Larry Z. made the case strongly that this needs to happen and soon in order for schools to make plans for the fall. Common agreement all around but no clear path for resolution. I'm worried about this one.