Higher Education Act Reauthorization
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Related Resources
AAMC Documents
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Current Status
On August 14, 2008, President Bush signed the "Higher Education
Opportunity Act" (P.L. 110-315), completing the first Higher
Education Act (HEA) reauthorization since 1998. The bill creates
new loan forgiveness programs, expands workforce shortage grants,
increases Perkins loan limits, requires State maintenance of education
funding, and provides for regulation and oversight of the student
financial aid community.
Public Service Loan Forgiveness Clarified
Effective July 1, 2009, a new loan forgiveness program established
by the "College Cost Reduction and Access Act of 2007"
(P.L. 110-84) will absolve Direct student loans for borrowers who
work 10 years in certain "public service" jobs and make
loan payments during that time. [see Student
Loan Repayment]. Among other professions, public service
will include all 501(c)(3) employers, "faculty teaching in
high-needs areas as determined by the Secretary," and service
at private organizations providing "public health" or
"emergency management" services. H.R. 4137 clarifies the
definition of public health to include "full-time professionals
engaged in health care practitioner occupations and health care
support occupations, as such terms are defined by the Bureau of
Labor Statistics."
Grants and Loan Forgiveness in Areas of National Need
P.L. 110-315 could expand medical schools' access to grants for
Graduate Assistance in Areas of National Need (GAANN). Under the
new definition, the Secretary of Education, in consultation with
appropriate Federal and nonprofit agencies and organizations, including
the National Science Foundation, the Department of Defense, the
Department of Homeland Security, the National Academy of Sciences,
and the Bureau of Labor Statistics, will designate areas of national
need based on the following criteria:
- The extent to which the interest in the area is compelling;
- The extent to which other Federal programs support post baccalaureate
study in the area concerned;
- An assessment of how the program may achieve the most significant
impact with available resources; and
- An assessment of current and future professional workforce
needs of the United States.
The AAMC believes that health professions education programs, such
as medicine and nursing, should qualify for GAANN institutional
grants in light of their expected workforce shortages.
P.L. 110-315 also creates a new loan forgiveness program for service
in areas of national need [see Student Loan
Repayment]. Under this program, "public sector employees"
and "medical specialists" are eligible for up to $10,000
in loan forgiveness over 5 years. Public sector employment includes
"full-time professionals engaged in health care practitioner
occupations and health care support occupations." Medical specialists
are defined as residents that have been accepted to, or currently
participate in, an ACGME-accredited graduate medical education training
program or fellowship that requires more than 5 years of total graduate
medical training and has fewer U.S. medical school graduate applicants
nationwide than the total number of positions available under these
programs or fellowships.
The bill prohibits participants in the loan forgiveness program
for service in areas of national need from receiving additional
repayments for the same service under the new public service loan
forgiveness program.
Perkins Loan Funding and Limits
A Federal Perkins loan is a low interest (5 percent) loan available
to medical students with exceptional financial need. [see
Federal Student Loans] P.L. 110-315 reauthorizes the Perkins
loan program through FY 2015 at $300 million, a $50 million (20
percent) increase over the current authorization level. The bill
also increases the annual Perkins loan limit for graduate/professional
students from $6,000 to $8,000 and provides a corresponding increase
in the aggregate (lifetime combined graduate and undergraduate)
loan limit for graduate/professional students from $40,000 to $60,000.
Maintenance of State Education Funding
P.L. 110-315 includes a State "maintenance of effort"
provision that requires a state's funding to public and private
educational institutions to match (in the aggregate) the average
annual support for the previous 5 academic years. Public institutions
funding is defined as non-capital and non-direct research and development
expenses or costs by such State. Private institutions funding is
defined as funds provided by the State for student financial aid
for paying costs associated with postsecondary education.
Financial Aid Oversight
P.L. 110-315 provides for regulation and oversight of the financial
aid community [see Financial Aid Regulation].
Among other provisions, the conference agreement:
- Requires institutions to develop and administer a code of conduct
for their financial aid offices;
Requires institutions to disclose all relationships with lenders;
- Requires "preferred lender lists" to include at least
three unaffiliated lenders and the process that was used to develop
the list;
- Prohibits financial aid administrators who participate on lender
advisory boards from receiving compensation for such activities,
and requires such administrators to report lender support provided
for travel and related activities;
- Prohibits staffing of campus financial aid offices by lenders
or their employees, excluding services provided in exit interviews
for borrowers;
- Bans all gifts, opportunity pools, and revenue-sharing between
lenders and institutions, with the exception of favorable loan
benefits/terms, informational material, professional training
programs, and exit/entrance interview services by lenders (under
the direction of the institution's financial aid administrator);
and
- Requires certain lender disclosures in private education loan
applications, solicitations, and approvals.
Higher Education Amendments
On September 27, 2007, President Bush signed the "College
Cost Reduction and Access Act" (P.L. 110-84). Among the most
notable changes, the measure includes a change to the definition
of economic hardship deferment, which eliminates the pathway that
most medical residents use to qualify for the program. The bill
also creates a new income-based repayment and "public service"
loan forgiveness program [see Student Loan
Repayment].
On February 8, 2006, President Bush signed the "Deficit Reduction
Act of 2005" (P.L. 109-171), which amends many of the student
loan provisions under HEA. The Congressional Budget Office (CBO)
estimated that the changes to the higher education programs in P.L.
109-171 will generate a net $11.9 billion in savings between FY
2006 and FY 2010 and $29.0 billion in savings between FY 2006 and
FY 2015. While the law's provisions mandate savings of over $20
billion between FY 2006 and FY 2010 from higher education programs,
$9 billion is recycled back into student aid. A majority of the
savings are generated through increases to borrowers' interest rates
and changes to lender-yield formulas.
Of particular interest to medical schools, P.L. 109-171:
- Extended authority for Federal Family Education Loan (FFEL)
program through 2012;
- Expanded the loan eligibility for the federal Parent Loan for
Undergraduate Students (PLUS) loan program to include graduate
and professional students (now "GradPLUS");
- Increased annual unsubsidized Stafford loan limits for graduate
and professional students from $10,000 to $12,000;
- Increased the interest rate for a PLUS loan in the FFEL from
7.9 percent to 8.5 percent;
- Created a parallel fee structure for the FFEL and Direct Loan
(DL) programs, incrementally reducing net borrower loan fees in
both the FFEL and DL over the next 5 years to 1 percent in 2010;
- Repealed spousal and in-school consolidation of FFEL and DL
loans;
- Limited "School as Lender" programs to Stafford Loans
for graduate and professional students; and
- Allowed the one time cost of obtaining the first professional
credentials to be included in total cost of attendance for students
enrolled in a program requiring professional licensure or certification.
On June 15, 2006, President Bush signed a FY 2006 Emergency Supplemental
Appropriations bill (H.R. 4939), repealing the single-holder rule.
The single-holder rule restricted consolidation of loans under the
FFEL by prohibiting borrowers whose FFELP loans are currently with
a single lender from consolidating under different lenders.
AAMC Activity
On May 14, 2008, the AAMC sent its most recent comment letter to
the House Education and Labor Committee and the Senate Health, Education,
Labor and Pensions Committee regarding the conference of the "College
Opportunity and Affordability Act of 2007" (H.R. 4137) and
the "Higher Education Amendments of 2007" (S.1642). The
letter commented on provisions of the Higher Education Act (HEA)
reauthorization bills that affect medical education including loan
repayment, financial aid, institutional grant programs, and accreditation.
The AAMC also joined with the American Medical Association(AMA)
in a March 12, 2008, letter to the House and Senate education committees
urging reinstatement of the economic hardship deferment's "20/220
pathway." The 20/220 pathway allows medical residents who meet
certain debt and income criteria to postpone loan repayments during
their training, without the additional interest that accrues in
forbearance. On March 5, 2008, the Department of Education announced
that they would no longer use its regulatory authority to continue
the 20/220 pathway, and would stop accepting applications effective
July 1, 2009 [see Student Loan Repayment].
The AAMC-AMA joint letter noted that "medical residents rely
on the 20/220 pathway to help defray their high debt burden,"
and "Borrowers with high loan debt may be deterred from entering
public health service, practicing medicine in underserved areas,
starting a career in medical education or research, or practicing
primary care medicine."
Contact
Matthew Shick, Senior Legislative Analyst
AAMC Government Relations
mshick@aamc.org
(202) 862-6116
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