Federal Student Loans Made Under the Federal Family Education Loan Program and the William D. Ford Federal Direct Loan Program: Terms and Conditions for Borrowers

David P. Smole
Specialist in Education Policy

The William D. Ford Federal Direct Loan (DL) program, authorized under Title IV, Part D of the Higher Education Act of 1965 (HEA), as amended, is the primary federal student loan program administered by the U.S. Department of Education (ED). The program makes available loans to undergraduate and graduate students and the parents of dependent undergraduate students to help them finance their postsecondary education expenses. The following types of loans are currently offered through the DL program: Subsidized Stafford Loans for undergraduate students; Unsubsidized Stafford Loans for undergraduate and graduate students; PLUS Loans for graduate students and the parents of dependent undergraduate students; and Consolidation Loans through which borrowers may combine multiple loans into a single loan. For FY2013, ED estimates that 22.5 million loans (not including Consolidation Loans) totaling $120.8 billion will be made to students and their parents through the DL program.

Until July 1, 2010, Subsidized Stafford Loans, Unsubsidized Stafford Loans, PLUS Loans, and Consolidation Loans were also available through the Federal Family Education Loan (FFEL) program, authorized under Title IV, Part B of the HEA. The SAFRA Act, part of the Health Care and Education Reconciliation Act of 2010 (HCERA; P.L. 111-152), terminated the authority to make new loans under the FFEL program after June 30, 2010. While new loans may no longer be made through the FFEL program, approximately $289 billion in FFEL program loans are outstanding and are due to be repaid over the coming years.

FFEL and DL program loans are low-interest loans, with maximum interest rates for each type of loan established by statute. Subsidized Stafford Loans are unique in that they are only available to undergraduate students demonstrating financial need. With certain exceptions, the federal government pays the interest that accrues on Subsidized Stafford Loans while the borrower is enrolled in school on at least a half-time basis, during a six-month grace period thereafter, and during periods of authorized deferment. Unsubsidized Stafford Loans and PLUS Loans are available to borrowers irrespective of their financial need; and borrowers are responsible for paying all the interest that accrues on these loans. FFEL and DL program loans have terms and conditions that may be more favorable to borrowers than private and other non-federal loans. These beneficial terms and conditions include interest rates that are often lower than rates that might be obtained from other lenders, opportunities for repayment relief through deferment and forbearance, loan consolidation, and several loan forgiveness programs.

In the recent years, numerous changes were made to the terms and conditions of DL program loans. The Budget Control Act of 2011 (BCA; P.L. 112-25) eliminated the availability of Subsidized Stafford Loans to graduate and professional students for periods of instruction beginning on or after July 1, 2012; and terminated the availability of certain repayment incentives for loans made on or after July 1, 2012. The Consolidated Appropriations Act, FY2012 (P.L. 112- 74) eliminated interest subsidies during the six-month post-enrollment grace period on Subsidized Stafford Loans disbursed between July 1, 2012, and June 30, 2014. The Moving Ahead for Progress in the 21st Century Act (MAP-21; P.L. 112-141) lowered the interest rate from 6.8% to 3.4% on Subsidized Stafford Loans made between July 1, 2012, and June 30, 2013. Also, for individuals who are new borrowers on or after July 1, 2013, MAP-21 restricted both the period during which individuals may borrow Subsidized Stafford Loans and the period during which the in-school interest subsidy may be provided to 150% of the published length of their educational program.


Date of Report: January 9, 2013
Number of Pages: 68
Order Number: R40122
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Campus-Based Student Financial Aid Programs Under the Higher Education Act

David P. Smole
Specialist in Education Policy

Alexandra Hegji
Analyst in Social Policy

Three Higher Education Act (HEA) student financial aid programs—the Federal Supplemental Educational Opportunity Grant (FSEOG) program, the Federal Work-Study (FWS) program, and the Federal Perkins Loan program—collectively are referred to as the campus-based programs. The campus-based programs were reauthorized under the Higher Education Opportunity Act (HEOA; P.L. 110-315), which amended and extended authorization for programs funded under the HEA. The campus-based programs are currently authorized to be funded through FY2014.

Under the campus-based programs, federal funding is provided to institutions of higher education for the provision of need-based financial aid to students. Institutions participating in the programs are required to provide matching funds equal to approximately one-third of the federal funds they receive. The campus-based programs are unique among the need-based federal student aid programs in that the mix and amount of aid awarded to students are determined by each institution’s financial aid administrator according to institution-specific award criteria (which must be consistent with federal program requirements), rather than according to non-discretionary award criteria, such as those applicable for Pell Grants and Subsidized Stafford Loans.

Each program provides students with a distinct type of aid. The FSEOG program provides grant aid only to undergraduate students. The FWS program provides undergraduate, graduate, and professional students the opportunity for paid employment in a field related to their course of study or in community service. The Perkins Loan program provides low-interest loans with favorable terms and conditions to undergraduate, graduate, and professional students.

Funding is provided to institutions separately for each program according to formulas that take into account both the allocation institutions received in past years (their base guarantee) and their proportionate share of eligible students’ need that is in excess of their base guarantee (their fair share increase). From these funds, institutions’ financial aid administrators award aid to eligible students who have financial need.

The programs are among the oldest of the federal postsecondary aid programs; however, they now operate amidst a host of other aid programs and tax benefits, some of which are not needbased. At present, a relatively small proportion of all students receive campus-based financial aid.

This report describes the FSEOG, FWS, and Federal Perkins Loan programs, as amended by the HEOA. It also presents historical information on appropriations provided for the programs and the federal student aid that has been made available to students through the programs.


Date of Report: January 3, 2013
Number of Pages: 28
Order Number: RL31618
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Trade Adjustment Assistance Community College and Career Training Grants

Benjamin Collins
Analyst in Labor Policy

Trade Adjustment Assistance Community College and Career Training (TAACCCT) grants are competitive grants to institutions of higher education for the development and delivery of career training programs that can be completed in two years or less. The program targets and gives enrollment preference to workers who have been adversely affected by international trade, though non-trade-affected workers may also participate in TAACCCT-funded programs.

TAACCCT is administered by the Department of Labor (DOL). It was created by the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5) and is authorized under the Trade Act of 1974, as amended. The Health Care and Education Reconciliation Act of 2010 (HCERA, P.L. 111-152) provided $500 million per fiscal year in mandatory appropriations for TAACCCT for FY2011 through FY2014. During this time, funds equal to at least 0.5% of the total annual appropriation must be awarded to institutions in each state.

TAACCCT grants may be used to design, develop, and deliver career training programs. Allowable uses of funds include personnel as well as materials and other expenses related to content delivery. Under the most recent solicitation for grant applications (SGA), TAACCCT grants provide a 48-month period of performance. This period includes 36 months for the design, development, and delivery of a training program and 12 months for data gathering and evaluation.

Statute requires that grant applications include a description of the proposed project and how it will serve trade-affected workers. Statute further specifies that grants will be judged on the merit of the proposed project and the local employment prospects for individuals who would complete the proposed program. SGAs have expanded upon statutory criteria. In some cases, the SGAs have elaborated on statutory provisions, and in other cases they have introduced largely new requirements for grant applications.

The first SGA was issued in January 2011 and grantees were announced in September of that year. The second SGA was issued in February 2012. The second installment of awards was announced on September 19, 2012.


Date of Report: December 18, 2012
Number of Pages: 10
Order Number: R42661
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Carl D. Perkins Career and Technical Education Act of 2006: Implementation Issues

Cassandria Dortch
Analyst in Education Policy

The Carl D. Perkins Career and Technical Education Improvement Act of 2006 (Perkins IV; P.L. 109-270) supports the development of academic and career and technical skills among secondary education students and postsecondary education students who elect to enroll in career and technical education (CTE) programs, sometimes referred to as vocational education programs. Perkins IV was authorized through FY2012, which ended on September 30, 2012. The authorization is extended through FY2013 under the General Education Provisions Act. This report provides a summary of potential reauthorization issues that Congress may consider in the 113th Congress.

Potential reauthorization issues and recommendations have been put forward by the Department of Education, the Obama Administration’s blueprint for reauthorization of Perkins IV, stakeholder and advocacy groups, and program evaluations. If Congress considers reauthorization of the Perkins act, key issues may include the following:

• To what extent should the federal government support CTE and in what ways, given competing priorities and an environment of fiscal constraint?
• How can the validity, reliability, and consistency of Perkins IV performance measures be improved to better assess program effectiveness while still allowing states flexibility to structure their CTE programs to meet state/local needs?
• How can the technical skills, academic/disciplinary proficiency, pedagogical, and classroom management capabilities of pre-service and in-service CTE teachers be maximized to ensure CTE students are academically and technically proficient?
• How can the secondary to postsecondary transitions and postsecondary completions of CTE students be facilitated and increased?
• What kinds of relationships should be fostered between the Perkins act, the Workforce Investment Act of 1998 (WIA; P.L. 105-220), and business and industry to strengthen the nation’s workforce development system?
• What is the optimal involvement of local business and industry representatives in the development and maintenance of CTE programs to ensure the CTE programs provide relevant curriculum and technical skills that respond to regional or national labor markets and that maximize the students’ post-education opportunities?
• How should Perkins IV funds be allocated to the states in the event of a potential decrease in funding levels?
• Should the Perkins IV funding mechanism be modified to balance the continuation of CTE programs with increased innovation in the development and delivery of CTE programs?

Date of Report: December 14, 2012
Number of Pages: 16
Order Number: R42858
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An Analysis of STEM Education Funding at the NSF: Trends and Policy Discussion

Heather B. Gonzalez
Specialist in Science and Technology Policy

Federal policymakers have a long-standing interest in science, technology, engineering, and mathematics (STEM) education that dates to at least the 1st Congress. In its contemporary construct, this interest largely focuses on the connection between STEM education and the U.S. science and engineering workforce, which, in turn, is often perceived as instrumental to national security and the U.S. economy.

The National Science Foundation (NSF) is a key component of the federal STEM education effort. Several inventories of the federal STEM education portfolio have highlighted NSF’s important role—both in terms of funding and in the number and breadth of programs. The NSF is also the only federal agency whose primary mission includes supporting education across all fields of science and engineering. As such, funding for STEM education at the NSF impacts not only the agency, but also the entire federal STEM education effort.

Congress reduced enacted funding levels (from the prior year) for NSF’s main education account in both FY2011 and FY2012. Those year-over-year reductions followed several years of varying funding, as well as changes in the distribution of the Foundation budget that reduced funding for the main education account as a percentage of the total NSF budget. For the most part, these changes appear to result from a combination of holding the main education account more-or-less constant while applying most of the Foundation’s FY2003-FY2011 budget growth to the main research account. However, in constant dollar terms, it appears at least some of the increase in funding for research activities during the observed period may have come at the expense of education activities.

It is not clear if these funding changes reflect evolving congressional and Administration policy priorities and an intentional prioritization of research over educational activities at the NSF or if they reflect the cumulative impact of funding decisions made in response to specific conditions in specific fiscal years that happen to have had this effect. Further, the significance of these changes for NSF’s STEM education and research missions—and for the overall federal STEM effort— depends, in part, on how they fit within the broader policy context. In particular, it depends (among other things) on how policymakers perceive and assess the policy rationale behind STEM education funding at the NSF; the character of NSF’s STEM education activities; the Foundation’s role in the federal STEM education portfolio; and the impact of changes in NSF’s education account on the Foundation’s other primary mission, research.

This report analyzes NSF funding trends and selected closely related STEM education policy issues in order to place conversations about FY2013 funding in broader fiscal and policy context. It concludes with an analysis of potential policy options.


Date of Report: December 12, 2012
Number of Pages: 25
Order Number: R42470
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