Washington Update

HBCU, HSI Funds Clear Congress

Amid tough negotiations on multi-billion-dollar education
proposals, Congress in October found enough room in its mammoth 1999
budget bill to provide more funding for historically Black colleges and
universities as well as Hispanic-serving institutions.

Total funding for institutional development increased Federal
funding for developing institutions under the Higher Education Act —
an increase of 22 percent, to $258 million — in the final White
House/Congress spending bill for fiscal year 1999. Programs serving
American Indians, Native Alaskans and Hawaiians, and community colleges
also shared in this increase.

The budget bill earmarked $134 million for the Title III HBCU
program, the same as the Clinton administration’s request, and a $16
million increase from last year. The House and Senate gave ground on
this issue, since both chambers had recommended smaller HBCU increases
in their individual education spending bills (see chart below).

HBCU graduate institutions received $30 million, $5 million more
than the 1998 figure. Taken together, the undergraduate and graduate
HBCU increases amounted to a 15 percent gain for 1999.

HSIs will receive twice as much in federal funds in 1999 than they
did previously, even though they started with a much lower funding
level than HBCUs. HSIs will receive $28 million next year, up from only
$12 million in 1998. This figure also represents a victory for the
administration, since the House and Senate had proposed $16 million and
$17 million, respectively.

The recently completed reauthorization of the Higher Education Act will give HSIs funding under Title V of the HEA.

Tribal colleges will receive an initial allotment under the new HEA
bill of $3 million next year. The recently passed bill, signed into law
in early October, created a new funding stream for these institutions.

HEA also authorized separate funding for colleges with significant
numbers of Native Alaskan and Native Hawaiian students. These
institutions also will receive $3 million in 1999 under the final
budget bill.

The other major portion of Title III, aid to strengthen developing
institutions, also will see more federal funds in 1999. The budget
agreement contains $60.2 million for this section of the law, an
increase of $4.8 million over last year. Community colleges are among
the recipients of these funds.

Congress Approves Smaller Pell Grant Increase than Previous Years

The neediest college students will get a higher Pell Grant next
year under terms of a delicately negotiated White House/Congress
education spending bill.

The new maximum grant, $3,125, is a $125 increase from the current
level. However, it is the smallest one-year jump during the past three
years.

But the White House and Congress did include funding for several
new initiatives contained in the just-completed reauthorization of the
Higher Education Act. The budget package provides $120 million to
launch the GEAR-UP for College program, which will feature partnerships
between high schools and colleges to prepare at-risk youth for higher
education.

This initiative was formerly called the High Hopes for College
program during congressional deliberations. Its main proponent in the
House of Representatives was Rep. Chaka Fattah (D-Pa.), a Congressional
Black Caucus member who said the plan could help many disadvantaged
youth learn about and prepare for college.

The budget also includes $10 million for a new distance learning
partnership program and $5 million to provide childcare for the
children of needy students.

Many existing programs received small to moderate funding increases
in the final budget package. Funding for TRIO programs will increase to
$600 million, up $71 million, while college work/study programs will
receive $870 million, a $40 million increase.

The budget pact contains $619 million for Supplemental Educational
Opportunity Grants, a $5 million increase. But it would cut Perkins
Loans by $35 million, to $130 million in 1999. The House of
Representatives, Senate, and White House all recommended less Perkins
funding this year.

After receiving large funding increases — and a HOPE Scholarship
program — in 1997, higher education generally took a back seat to K-12
education in the 1999 budget deliberations. For example, the final
agreement includes $1 billion as a down payment to help schools hire
more teachers.

The Clinton Administration’s goal is to reduce class sizes in the
elementary grades, and the new funds will target the first through
third grades.

Head Start also will receive a $300 million increase in the new
budget, enough to serve an additional 36,000 children. The child
development program will receive $4.6 billion in 1999.

The White House also won a critical victory when Congress agreed to
fund a major summer youth employment program in 1999. Earlier, the
House had voted to terminate the Labor Department’s summer youth
program, which received $871 million in 1998. The final agreement
maintains the program at its current funding level.

Congress also agreed to an administration request of $250 million
for Opportunity Zones for Youth, an effort to provide education,
training, and other activities for out-of-school youth in low-income
neighborhoods.

President Bill Clinton signed the bill after congressional passage in late October.

Default Rate Continues Decline

The student loan default rate fell below 10 percent for the first
time in 1996, as all sectors of higher education showed improvement,
the Education Department (ED) said last month.

The 9.6 percent default rate for 1996 was down nearly a full
percentage point from the previous year. It also is less than half the
22.4 percent default rate ED reported back in 1993. An improved economy
and tougher enforcement has saved about $3 billion in taxpayer revenue,
the department said.

Education Secretary Richard Riley called the changes “momentous,”
particularly following two years in which the federal government
expanded aid to higher education through the HOPE Scholarship, lifelong
learning credit, and higher Pell Grants. Default rates also should show
continued improvement because of the lower interest rates included in
the recent reauthorization of the Higher Education Act.

However, ED did identify sixty-six higher education institutions at
risk of losing eligibility for all student aid programs because of
one-year default rates above 40 percent. Most of these were for-profit
trade and technical schools.

Three historically Black colleges also made this list: Concordia
College in Selma, Ala., with a 50 percent default rate; Southwestern
Christian College in Terrell, Texas, with a 45.2 percent rate; and
Texas College in Tyler, with a 43.2 percent rate.

ED cannot remove HBCUs from the program, however, because Black
colleges continue to have an exemption from default rate sanctions.

Forty-four colleges and universities also could lose access to
student loan programs because of default rates above 25 percent
annually in 1994, 1995, and 1996. No HBCUs appeared on this list,
according to ED data.

Aid for Institutional Development
(in millions)

1998 1999
Funding Clinton Proposal

HBCUs $118.5 $134.5
HBCU Graduate Institutions 25.0 25.0
Hispanic-Serving Institutions 12.0 28.0
Title III-A Institutions 55.4 60.0
Tribal Colleges -- 5.0
Native Alaskan/Hawaiian Institutions -- --

1999 1999
House Plan Senate Plan

HBCUs $130.0 122.5
HBCU Graduate Institutions 30.0 30.0
Hispanic-Serving Institutions 16.0 17.0
Title III-A Institutions 55.4 55.4
Tribal Colleges -- --
Native Alaskan/Hawaiian Institutions -- --

1999
Final Bill

HBCUs $134.5
HBCU Graduate Institutions 30.0
Hispanic-Serving Institutions 28.0
Title III-A Institutions 60.2
Tribal Colleges 3.0
Native Alaskan/Hawaiian Institutions 3.0

SOURCE: U.S. CONGRESS, 1998

COPYRIGHT 1998 Cox, Matthews & Associates

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