Roundup: Week of September 3 – September 7

Bush to Sign Reconciliation Bill

As Higher Ed Watch predicted, President Bush has dropped his threat to veto legislation Congressional Democrats finalized this week that would slash lender subsidies, cut the interest rate on federally subsidized student loans in half, and provide a major boost to the maximum Pell Grant. The President had previously threatened to veto the House version of the legislation in a July 10 Statement of Administration Policy, objecting particularly to the plan to slash the student-loan interest rate. Undaunted by the threat, Democrats decided to call the Administration’s bluff. On Thursday night, Education Department officials confirmed earlier reports that Bush would sign the bill into law once Congress approves it. A Department spokeswoman said that the Administration was still unhappy with the interest-rate provision, but that it was pleased that Congressional leaders had answered the Presidents call to significantly increase funding for Pell Grants. The legislation, which could be voted on as early as today, is expected to pass both chambers by veto-proof majorities.

New Kennedy Report Uncovers Additional Corruption in Loan Industry

A report released by a key Senate committee on Tuesday provides substantial new evidence that many of the largest lenders in the Federal Family Education Loan (FFEL) program have engaged “in marketing practices that violate both the spirit and the letter of the inducement prohibition of the Higher Education Act. The document, which was put out by the Senate Health, Education, Labor, and Pensions Committee under the chairmanship of Sen. Edward Kennedy (D-MA), builds on a similar report the panel released in mid-June. [Disclosure: The editor of Higher Ed Watch previously worked for Senator Kennedy.] The new report includes numerous e-mails from loan industry officials openly discussing the types of incentives they were providing colleges — often at those institutions’ request — to get the schools to steer borrowers their way. The findings of the report underscore the urgent need for reform of the student loan system, Kennedy said in a press release. Kennedy also noted that all of the practices cited in the report would be banned under legislation the Senate passed in July to reauthorize the Higher Education Act. Some Republican lawmakers, however, were critical of the reports content, noting that many of the lenders cited in the report had already admitted to many of the allegations when they signed agreements with New York Attorney Andrew Cuomo as part of his ongoing loan probe. “It simply plows the same old ground, and won’t stop bad lenders from taking advantage of students and working families,” said Sen. Mike Enzi (R-WY) in a written statement.

Universities Increasingly Raising Fees, Rather than Tuition

A combination of stagnant state higher education funding and a reluctance to raise tuition rates has led many state colleges and public universities to increase the fees they charge their students, The New York Times reported Tuesday. These fees, which can be assessed on everything from student activities to computer service, rose by an average of 8 to 11 percent at public colleges in the 2005-2006 school year, outpacing growth in both the rate of inflation and tuition at these institutions. While individual fees may be as low as $10, they can often add up to hundreds or even thousands of dollars. College officials say these fees are necessary because states have not been providing sufficient funds and have been reluctant to raise tuition. But some state legislators have expressed outrage over the opaque nature of the fees, calling them a “backdoor tuition increase.”