On August 14, 2008, ten years since its last reauthorization, President Bush signed into law the Higher Education Act (H.R. 4137). The law was originally set to expire in 2003, but Congress has passed 16 short-term extensions in the past four years.
In addition to rising tuition, students and their families face an overly complex federal student aid application process and a student loan industry that’s caught up in conflicts of interest and troubled lending practices. In response to this, the House and Senate approved a five-year reauthorization of the Higher Education Act in early August. The House’s vote was 380 to 49; the Senate’s was 83 to 8. The bill will nearly double the maximum amount of Pell Grants by 2014 and will require the Education Department to collect and publish better data on tuition costs at universities and colleges.
In addition to increasing Pell Grants, the legislation seeks to clarify the application process. One provision simplifies financial aid forms by reducing the number of questions asked and mandating it that contain more easily understood language. The legislation also imposes new regulations on financial institutions that make private loans to students not in the federal student loan program. It requires those lenders to disclose 27 pieces of information, such as disclosing at least three times in the application process all potential finance charges, late fees, penalties, and adjustments to the loan. It also gives student borrowers up to 30 days to terminate a loan after an application is approved.
Additionally, with textbook costs averaging about $900 a year and many students forced to pay hundreds of dollars for a required book “bundled” with a DVD or workbook, the new law would require publishers to provide full pricing information and sell unbundled versions of every textbook.