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College Access and Opportunity Act (HR4283)

The House Committee on Education and the Workforce introduced the College Access and Opportunity Act on May 5, 2004. This is the House legislation to reauthorize the Higher Education Act of 1965 for the next six years through 2011.

This page contains FinAid's summary of the proposed changes to the Higher Education Act.

Impact on Students

Most of the proposed changes are beneficial to students. There are, however, a few provisions that are not helpful to students:

  • The proposed legislation does not increase the Pell Grant and will hold the maximum authorized Pell Grant flat for the next six years.
  • It increases annual student loan limits by only a token amount and does not increase cumulative loan limits. This will force many students to use more expensive private loans to help pay for their education.
  • It switches consolidation loans from a fixed interest rate to a variable interest rate. This will eliminate a source of competitive pressure on lenders that would otherwise act as an incentive for lenders to improve their customer service and cut costs. So although the legislation eliminates the anticompetitive single holder rule, it mutes the effectiveness of this change by removing the ability for students to consolidate their debt in order to lock in low interest rates.

Pell Grant

  1. Pell Grant Plus. Authorizes an extra $1,000 Pell Grant for lower income first and second year students who complete a rigorous high school curriculum through the State Scholars Program. The total amount of the Pell Grants may not exceed cost of attendance.

  2. Provides for year-round Pell Grant aid for students who accelerate their programs by attending college throughout the year.

  3. Repeals tuition sensitivity aspects of Pell Grant award determination.

  4. Keeps the maximum authorized Pell Grant at $5,800 through 2011.

Need Analysis

  1. Expands the Simplified Needs Test to apply to families that receive benefits under a means-tested Federal benefit program, such as food stamps or school lunch programs.

  2. Increases the dependent student IPA from $2,200 to $3,000 effective July 1, 2005.

  3. Authorizes a data match of any FAFSA data that is supposed to be based on the family's income tax returns with the same information filed with the IRS. This provision is intended to eliminate fraud.

  4. Adds "a student's status as a ward of the court at any time prior to attaining 18 years of age" as an additional example of a special circumstance that merits professional judgment.

  5. Adds students who are "currently serving on active duty in the armed forces for other than training purposes" to the definition of students automatically considered to be independent.

  6. Modifies the need analysis treatment of qualified tuition plans (section 529 plans) so that both section 529 prepaid tuition plans and section 529 college savings plans are treated as an asset of the parent (or in the case of an independent student, as an asset of the independent student) and that non-taxable distributions from qualified tuition plans are excluded from income. The specific language of the proposed change would also indicate that a section 529 plan funded through a student's custodial account (UGMA/UTMA) would no longer be treated as an asset of the dependent student, but instead as an asset of the dependent student's parents for need analysis purposes. The valuation of prepaid tuition plans would be equal to the refund value of the plan. The valuation of college savings plans would continue to be the current balance of the account.

Student Loans

  1. Gradually reduces loan origination fees for both FFEL and Direct Loans to 1% (i.e., 2% from July 2006 to July 2008, 1.5% from July 2008 to July 2010, and 1% from July 2010 onward). The 1% guarantee fee will continue to be required of FFEL loans.

  2. Increases Stafford loan limits during the first year from $2,625 to $3,500 and during the second year from $3,500 to $4,500. Loan limits during the remaining years will remain unchanged at $5,500 and cumulative loan limits will remain unchanged at $23,000. Unsubsidized loan limits for graduate students will increase from $10,000 to $12,000.

  3. Repeals the change in Stafford Loan interest rates to a fixed rate of 6.8% on July 1, 2006. Instead, the Stafford Loans will continue to be based on a variable interest rate that changes each July 1. Likewise, it repeals the change in PLUS Loans to a fixed interest rate of 7.9% on July 1, 2006, allowing the loans to continue to have a variable interest rate.

  4. Changes consolidation loans from a fixed rate to a variable interest rate starting July 1, 2006. The variable interest rates will be based on the 91-day T-Bill in the same manner as for current education loans.

  5. Eliminates the single-holder rule effective July 1, 2006.

  6. Adds an interest-only repayment plan. The "Delayed Repayment Plan" allows the borrower to make payments of interest only for up to two years. Annual payments must be at least the interest due or $300, whichever is greater.

  7. Increases opportunities for Perkins Loan cancellation for military personnel.

  8. Increases student loan forgiveness for math, science and special education teachers who commit to teaching in high-need K-12 schools for five years from $5,000 to $17,500.

  9. Increases Perkins Loan limits from $4,000 to $5,500 for undergraduate students and from $6,000 to $8,000 for graduate and professional students, and the cumulative limits from $20,000 to $27,500 for undergraduate loans and $40,000 to $60,000 for graduate and undergraduate loans combined.

  10. Eliminates the ability of married borrowers to consolidate their loans together, as this causes problems for such borrowers in the event of a divorce.

Consumer Information

  1. Requires the US Department of Education to publish "College Consumer Profiles" based on the data it receives from colleges, including tuition and fees, room and board, cost of attendance, average amount of financial aid received by full time undergraduate students (including a breakdown according to type of aid), the number of students receiving financial aid, the average net price for students receiving financial aid, student demographics, faculty/student ratios, and the institution's instructional expenditure per full-time equivalent student.

  2. Calculates a "College Affordability Index" based on the ratio of the percentage tuition increase during the past three years and the corresponding percentage increase in the inflation rate (CPI-U). Will publicize a list of colleges that routinely increase tuition and fees at more than twice the rate of inflation. Exempts institutions who charge tuition rates that are in the bottom quartile for their class (private/public, nonprofit/for-profit, and 1/2/4-year program) or for whom the increase exceeds the twice inflation threshold by less than $500.


  1. Extends incentives for schools with default rates under 10%, such as the 30-day delay for first-time borrowers.

  2. Repeals the 90/10 rule.

  3. Combines the two current definitions of institution of higher education, making proprietary schools eligible for more forms of student aid.

  4. Repeals the 50-percent rule, which acts as a barrier to distance education.

  5. Clarifies that the drug-related offenses restriction only applies to students are convicted under federal or state law for possession or sale of a controlled substance while currently enrolled and receiving federal student aid.

  6. Includes many of the FED UP recommendations.

  7. Prohibits discrimination based on political, ideological or religious beliefs or exercise of free speech/association.

  8. Requires the National Postsecondary Student Aid Study to occur at least once every four years.

  9. Phases out the current method of allocating funds for campus-based aid by reducing the percentage of allocations based on previous allocations by 20% every two years.

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