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The First 100 Hours of New Congress Bring Lower Expectations for Higher Ed Funding

While many education advocates hope Democrats will push for more funding this year, early signs are emerging that the 110th Congress may have trouble fulfilling this goal.

House Democrats are already opting for a ‘go-slow’ approach on one of their top campaign promises of fall 2006 — to slash student loan interest rates in half, to 3.4 percent. Under legislation proposed for the new Congress’ first 100 hours of business, the House of Representatives would make such a cut, but only over a five-year period. As a result, the promise wouldn’t be fulfilled until 2011.

“It’s all about cost,” one education advocate told Diverse. Cutting the interest rate by half would cost $30 billion over five years if approved immediately — a task made more difficult with the government already operating under a deficit.

But the issue became even more complex after Democrats voted to tighten budget rules on new spending and tax cuts. Under the new policy, called “pay-as-you-go,” all new initiatives must be fully funded either through higher taxes or budget cuts.

That has major implications for the interest-rate plan and its $30 billion price tag. But implementing the change over five years would cost only about $6 billion.

 Under the House legislation, interest rates for subsidized student loans for undergraduates would drop from 6.8 percent to these levels:

  • 6.1 percent in 2007;
  • 5.4 percent in 2008;
  • 4.8 percent in 2009;
  • 4.1 percent in 2010; and
  • 3.4 percent in 2011.

Advocates for students said the change still would have a significant impact.

“Lowering interest rates on loans is a great first step towards a more affordable college education,” says Luke Swarthout, a higher education advocate for U.S. PIRG, a public issue advocacy group. 

Even with a phased-in approach, the typical four-year college student starting school in 2007 with subsidized Stafford Loans would save about $2,280 over the life of the loans.

But while the House is giving priority to the interest rate cut, Senate Democrats may be more inclined to look first at Pell and other need-based aid.

Senate Majority Leader Harry Reid, D-Nev., has introduced a bill that would address both loan interest rates and the Pell Grant. “In the last six years, the cost of college has increased 52 percent while federal assistance in the form of Pell Grants has declined,” he says.

Reid’s bill drew support from many top Senate Democrats, including U.S. Sens. Edward Kennedy, D-Mass., and Hillary Rodham Clinton, D-N.Y.

While the interest rate cut is on Congress’ immediate agenda, colleges and universities may see some long-term changes as a result of Democratic crackdowns on special projects.

Legislation approved by the House requiring lawmakers to disclose publicly all earmarks that may benefit individual organizations is likely to have an impact on colleges and universities.

Democrats are “subjecting all earmarks to the full light of day,” says House Speaker Nancy Pelosi, D-Calif. The same bill also would ban lawmaker gifts and travel provided by lobbyists.

The crackdown on earmarks is likely to affect some higher education organizations, particularly those with part- or full-time lobbyists in Washington.

“It’s going to hit the larger colleges most,” says one analyst. Some state university systems have sizable Washington, D.C., offices with lobbyists who pursue earmarks in budget, appropriations and other bills.

The University of North Dakota, for instance, was expecting $7 million in earmarked funds from an appropriations bill that did not pass the 109th Congress. That money was to fund projects including a rural health center and a program that motivates American Indians to enter the medical field.

Elsewhere on Capitol Hill in January, the Congressional Black Caucus elected Rep. Carolyn Cheeks Kilpatrick, D-Mich., as chairwoman for the new Congress. Kilpatrick is beginning her sixth term representing a district in the Detroit area.

In accepting the post, Kilpatrick said one of her chief aims is to promote fairness by “closing disparities that persist between African Americans and other Americans.”

–Charles Dervarics

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