Federal Update: Congress Passes Tax Reform, Avoids Shutdown, will Adjourn for the Year

December 21, 2017

In its final week before adjourning for the year, Congress moved to clear the deck of some major outstanding issues, beginning with final passage of the tax reform bill (more information here) on Wednesday. With that package headed to the President’s desk for his signature, Congress turned its attention to funding the government ahead of the December 22 expiration of the current continuing resolution (CR). Unprepared to finalize spending for the year, lawmakers passed yet another short-term CR to provide stopgap funding at current spending levels through January 19.

While it was hoped that Democratic and Republican leaders would pair the CR with a full-year FY18 budget agreement to raise the overly constraining statutory spending caps, their negotiations repeatedly stumbled over familiar issues, including border wall funding, DACA, and parity between defense and non-defense funding increases. Despite the breakdown in negotiations, leaders on both sides showed no appetite to force a holiday-season shutdown of the government and so delayed final fiscal decisions into January when the specter of a shutdown will likely return in earnest. The short-term CR approved this week also waived a decades-old law that would have mandated steep across-the-board cuts to mandatory spending because of the negative budget impact of the tax bill. The CR includes funding for the Children’s Health Insurance Program (CHIP). In the New Year, Congress will need to take action on a host of issues it postponed, including a full reauthorization of CHIP, disaster aid, a permanent DACA fix, measures aimed at stabilizing the ACA health-insurance markets, and more.

Higher Education Act Reauthorization

Amid the intensity of the tax reform debate, the House Education and Workforce Committee made progress on another stated New Year priority for Congressional Republicans: the reauthorization of the Higher Education Act (HEA). After introducing a comprehensive HEA rewrite with only a few days' notice, Chairwoman Virginia Foxx (R-NC) moved quickly to the markup phase and approved the bill on a party-line vote after a contentious 14-hour session. Foxx hopes the bill will be considered before the full House early in 2018, but despite the House’s rapid pace, these are merely the first early steps in a long, uncertain process that—if even successful—could take more than a year to work through Congress. The Senate, where 60 votes will ultimately be needed for passage, is expected to move in a more deliberate, bipartisan manner than the House. To date, the Senate HELP Committee has made some initial overtures toward reauthorization with a collegial hearing on simplifying the federal student aid application, but legislative text is still a ways off.

Even so, the House bill, dubbed the PROSPER Act, is a significant policy marker for Chairwoman Foxx and many in the House GOP. Here are some of the PROSPER Act’s highlights:

  • Consolidation of federal aid programs into one unsubsidized loan program (undergraduate, parent, and graduate), one grant, and one work-study program.
  • The loan program would be unsubsidized, capped and at higher rates for all borrowers. In addition, loan repayment would be consolidated into two options (standard 10-year or income-based repayment) and no loan forgiveness, including Public Service Loan Forgiveness.
  • Supplemental Education Opportunity Grants, Byrd Fellowships, and the TEACH grant program are repealed.
  • In Federal Work Study, graduate students lose all eligibility, the funding formula is reworked, and the requirements and incentives for community service in work-study are repealed.
  • Pell Grants are extended to cover costs of more certificate and credential programs.
  • Modification to campus sexual assault policies, including codifying recent changes to the standard of proof and campus-based adjudication of sexual assault cases, mandating triennial campus climate surveys, and changing Clery Act reporting requirements.
  • In a last minute addition, inclusion of a new federal policy that would ban colleges from punishing or restricting student members of officially recognized single gender social organizations.
  • Significant deregulation of higher education, including a single unified definition of higher education, elimination of recent rules on state authorization for distance education programs, and the repeal of the gainful employment rule.
  • A new consumer website, the College Dashboard, similar to the existing Obama-era College Scorecard.
  • Significant expansion of apprenticeships, industry partnerships, and support for short-term programs.

Overall, the PROSPER Act intentionally seeks to shrink the role of the federal government in higher education and undermines efforts to enhance affordability and access. Many DC-based higher education associations and coalitions publicly opposed the bill’s troubling provisions and have urged Congress to take a more patient, deliberate, bipartisan approach to reauthorization. As previously noted, this bill remains an early step in a long process. We will stay closely engaged with key elected members, alumni, and staff and through DC-based industry association groups.

As we look ahead, we will be keep you updated on significant updates in the New Year on further developments, and as always please feel free to be back in touch with Suzanne Day (suzanne_day@harvard.edu) or Jon Groteboer (jon_groteboer@harvard.edu) with any questions or concerns.