Dems Unveil Scaled-back SAFRA Provisions, Attach It to Health Care Reform Legislation

WASHINGTON – Congressional Democrats on Thursday unveiled a scaled-back higher education bill as part of comprehensive health care legislation in preparation for a potentially historic Capitol Hill vote this weekend.

 Within the Healthcare and Education Affordability Reconciliation Act of 2010, the higher education provisions contain many elements of the earlier $87 billion Student Aid and Fiscal Responsibility Act (SAFRA) that cleared the House last year. But the “new” SAFRA has less funding, as lawmakers reduced the scope of the bill to meet budget targets.

 Lawmakers would pay for SAFRA by ending federal subsidies to banks that offer student loans. Instead, the legislation would require colleges to switch to the federal government’s Direct Loan program. As some colleges already have made this switch in anticipation of action on this legislation, congressional Democrats say the move now would save $61 billion.

 Included in the latest version of SAFRA is $36 billion to increase Pell Grants for needy students over a 10-year period. The maximum grant would jump from $5,550 in 2010 to $5,975 by 2017. The Pell funding figure includes $13.5 billion to address a growing Pell Grant shortfall created by heavier-than-expected use of the program during the recession.

 Elsewhere, the new version contains $2.5 billion in funding for historically Black colleges and universities and minority-serving institutions. A statement from House Democrats listed the overall figure but did not specify the breakdown of funds within the MSI sector.

 Community colleges would get $2 billion in competitive grants to develop or improve educational and career training programs. This provision is one of the few provisions remaining from President Obama’s $12 billion American Graduation Initiative earmarked for two-year public colleges.

 “This legislation offers the most sweeping changes to the federal student loan program in a generation,” said Rep. George Miller, D-Calif., chairman of the House Education and Labor Committee.

 Another Obama priority—loan repayment based on income—would be part of the new package. The White House plan for income-based repayment would allow borrowers to pay only a small portion of their discretionary income to pay back student loans. By 2014, students enrolled in this option would have their student loan repayments capped at 10 percent of their income after necessities. This initiative would carry a cost, included in the bill, of $1.5 billion.

 The bill also would provide $750 million in formula grants to states to improve college access and completion rates.

 Higher education advocates have been calling on Congress to approve the SAFRA bill for months, but the measure did not come up for a vote in the Senate. Now, however, Democrats plan to attach this scaled-back version to a bill known as “budget reconciliation” that lawmakers use to meet budget targets. Democrats also plan to add comprehensive health care reform to the reconciliation bill.

 One advantage of using this process is that reconciliation bills require only a simple majority vote for approval in the Senate, instead of a filibuster-proof majority of at least 60 votes. Floor votes on the measure are expected this weekend.