New Policy in the US in 2021: New laws on Higher Education to reduce worries of rising tuition
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Illinois Higher Education program
As of January 1, every child born or adopted in the state of Illinois will have $50 deposited into a college savings account. That small investment is part of a new law that establishes the Illinois Higher Education Savings Program, which lawmakers hope will encourage families to start saving for their child's education early and will allow that money to grow. In addition to a traditional four-year college, the money can also be used for vocational schools, two-year colleges, and other institutions, according to CNN.
Local Quad City financial experts say the cost to attend college keeps going up 5 to 6% each year. State legislators passed this law to combat those rising college tuition costs, and lawmakers hope it will remind parents to contribute to their child’s college fund starting at birth.
State Representative Michael Halpin (D) believes the initial $50 will be a kickstart to saving. According to Grywacheski, Quad City Investment Advisor, college tuition will cost $310,000 for a kid to go to a 4-year college in 2039. To reach that amount families can have to invest $127,000 at a moderately aggressive 6% growth rate, or $65,000 at a very aggressive 10% rate. But democratic lawmakers stress the $50 isn’t meant to grow in an investment fund; it’s more comfortable for parents to know they have a place to save. High school graduates who don’t use the $50 and any money saved by the time they’re 26 will be forfeited back to the state for other students in the future, according to WQAD.
Simplifications to the Federal Application for Financial Student Aid (FAFSA)
The legislation grants retiring Sen. Lamar Alexander (R-TN), chairman of the U.S. Senate Committee on Health, Education, Labor, and Pensions, his long-sought goal of simplifying the FAFSA. It would cut the number of questions to a maximum of 36, down from the more than 100 questions used currently. This includes eliminating questions on drug convictions and selective service registration. The more significant change is a new formula for Pell Grant eligibility. Students from families who earn up to 175 percent of the federal poverty line, or up to 225 percent for single parents, will automatically qualify for a maximum grant. Those who make up to 275 percent of the poverty line, or 325 percent for single parents, are guaranteed at least the minimum award.
According to a summary of the bill, these changes would make an estimated additional 1.7 million students eligible for the maximum Pell award and an additional 500,000 students eligible for at least the minimum grant. While the FAFSA is losing questions, it is importantly gaining one question on applicants’ race and ethnicity. This will help the U.S. Department of Education track loan outcomes, completion, repayment, and default with an equity lens—and is something CAP called for in 2019. Interestingly, these reforms also grant the department the authority to issue regulations around defining the nontuition parts of the price of college—something that was previously prohibited.
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The legislation expands student benefits in other ways, several of which will particularly help address the ongoing effects of mass incarceration of Black individuals. It will restore Pell Grant eligibility for any incarcerated student enrolled in prison education programs. This corrects a measure in the 1994 crime bill that rescinded the Pell Grant from more than 23,000 students at the time and disproportionately harmed the Black community. The omnibus bill also reinstates Pell Grant eligibility to students who were previously convicted of a drug-related offense. Finally, it restores Pell Grant eligibility for students who have been defrauded by their college as well as the limit that only allowed borrowers to receive subsidized loans for up to 150 percent of the scheduled length of their program.
Two other welcome changes have slightly more explicit ties to the pandemic. First, the bill will forgive an estimated $1.3 billion in low-cost federal loans provided to historically Black colleges and universities for repairs, renovations, and construction on their campuses. Second, it counts an applicant receiving unemployment benefits during a national emergency as having no income. This change—first made through guidance in 2009 but not repeated by the Trump administration—helps those who are out of work access Pell Grants. Finally, the bill contains a host of additional language related to the ongoing student loan servicing competition, which is already on a very tight timeline.
|Photo: USA News|
COVID-19 relief package
The COVID-19 relief package provides approximately $22.7 billion to higher education—about one-quarter of its $82 billion in total education funding. This amounts to roughly $8 billion more than what Congress granted to higher education in the spring and is significantly less than the $120 billion colleges have said they need due to the ongoing costs of the pandemic. Of the appropriated amount, $20 billion goes directly to public and nonprofit institutions, $1.7 billion to minority-serving institutions, and about $680 million toward student assistance at for-profit colleges.
The formula money will be awarded based on three categories of students, each split equally between that measure based on headcount and the same indicator based on FTE student enrollment. For example, three-quarters of the money—37.5 percent headcount and 37.5 percent FTE—will be awarded based on the number of Pell recipients who were not attending entirely online prior to the pandemic. Another 23 percent will be allocated based on the share of non-Pell recipients who were not attending entirely online prior to the pandemic. Finally, 2 percent of funds will be awarded based upon Pell students who were attending entirely online prior to the start of the crisis. The money allocated to minority-serving institutions has different formulas.
On the net, the partial inclusion of headcount makes this bill better than the CARES Act was for community colleges. An estimate of this new formula with the same data used to model the earlier formula suggests that public colleges of two years or less will receive about 36 percent of the formula funds, compared with about 30 percent of the formula funds that went to public and private nonprofit colleges in the spring.
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