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