Summary: President Clinton signed the Higher Education Amendments of 1998 into law
November 18, 1998
On October 7, 1998, President Clinton signed the Higher Education Amendments of 1998 into law. In a strong show of bipartisan support, both the House of Representatives and the Senate passed this legislation unanimously.
I believe this new legislation will help strengthen higher education for the next century. The law promises to help reduce the cost of student loans, prepare more students for college, recruit and train well-qualified teachers, expand the innovative use of distance learning, and reduce administrative burdens on schools. Today, I am writing to ask your help in fulfilling that promise.
First, the Higher Education Amendments of 1998 (HEA) extend the low interest rate formula on new student loans -- proposed by Vice President Gore and available since July 1, 1998 -- for five more years. The new interest rate is 7.46 percent this year, reduced from 8.25 percent. As a result, students will save roughly $50 for every $1,000 of debt over the life of their loans.
Since July 1, students have been able to refinance and consolidate their existing loans through the Direct Loan program to receive the lower interest rate. The Clinton Administration sought to extend this interest rate on consolidation loans through both the Direct Loan and the Federal Family Education Loan (FFEL) programs. However, Congress extended the low rate on direct consolidation loans only through January 31, 1999, and established a new maximum allowable rate for FFEL consolidation loans. After January 31, the rate on direct consolidation loans will rise to be the same as the maximum rate on FFEL consolidation loans today: the weighted average rate of the underlying loans, capped at 8.25 percent.
Please help us spread the word among recent college graduates, perhaps through your alumni association, that there are only three more months to benefit from the substantial savings that are now available on consolidated student loans. I have enclosed a fact sheet with more information.
Second, the HEA launches a new national effort to help disadvantaged students prepare for college. Called GEAR UP, this program provides competitive grants to colleges and universities to team up with middle schools in low-income areas, community organizations, businesses, state agencies, and others to provide teenagers with rigorous academics, mentoring, tutoring, and information about college and financial aid. GEAR UP will also award grants to states to provide similar services. The FY 1999 appropriation provides $120 million to this initiative.
GEAR UP is based in part upon President Clinton's High Hopes for College proposal which was endorsed by more than 300 college presidents. I appreciate the support of these college presidents, which made a real difference when this proposal came before Congress. Now, I ask for your help again. I encourage you to form a local college-school partnership or to work with your state to participate in GEAR UP.
We have a wealth of data that shows early intervention programs can make a powerful difference. To raise expectations and achievement, families need to know that college is affordable regardless of their income. Students need access to the rigorous core courses that prepare them for college and the mentoring and support services to help them stay on track.
With your help, GEAR UP can expand educational opportunities for America's youth and increase diversity at our colleges and universities. For more information, please visit the web site (www.ed.gov/gearup) or send an e-mail to
Third, the HEA recognizes the need to recruit more teachers and ensure that those teachers are well-prepared to teach all students to the highest standards. The FY 1999 appropriation provides $75 million in fiscal 1999 to three grant programs that will help us meet those challenges.
The Teacher Preparation Partnership initiative will fund partnerships among teacher preparation institutions, schools of art and science, and local school districts and others. These partnerships which will be funded for up to five years, will work to improve teacher education so that new teachers will have strong teaching skills, be highly competent in the academic content areas in which they plan to teach, and know how to use technology as a tool for teaching and learning. This program is modeled in large part on the Clinton Administration's Lighthouse Partnerships proposal.
The Teacher Recruitment Partnership initiative will fund partnerships between high-quality teacher education programs and local schools in high-need areas. The partnerships will be funded for a period of up to three years, and will provide prospective teachers who agree to teach in high-need areas for at least three years with scholarships and other support during their preparation and first years of teaching.
The HEA also includes a State Grant Program that will support state efforts to strengthen teacher certification standards, hold institutions of higher education accountable for high-quality teacher preparation,and reduce shortages of qualified teachers in high-poverty urban and rural areas. These grants will be funded for up to three years.
You may also be interested to know that, through this new law, Congress has required state and institutional report cards on teacher quality. Any state that receives HEA funding and any institution of higher education whose teacher preparation program enrolls students who receive federal assistance under the HEA must report on indicators, such as pass rates on teacher licensing exams.
Fourth, the HEA includes two Clinton Administration proposals that recognize the growing importance of technology in delivering postsecondary education across distances and to non-traditional students. The Learning Anytime, Anywhere Partnership (LAAP) program will award competitive grants to partnerships between schools and other entities to create new distance learning models, explore possible efficiencies and cost reductions through institutional partnerships, and develop innovative measures of student achievement. The LAAP program received $10 million in fiscal 1999 funding.
The new law authorizes demonstration programs that waive some student aid restrictions to allow more non-traditional students -- including full-time workers, parents, people in rural areas, and people with disabilities -- to obtain higher education. I am optimistic that these programs will help us keep up with today's rapid changes in postsecondary education.
Finally, the HEA enacts several Administration proposals to lighten the burden on schools of administering the student aid programs. For example, the law simplifies refund requirements and procedures for determining loan amounts for students who attend for less than a full year. It also reduces paperwork by allowing students to use the FAFSA as an application for FFEL loans (as previously available in the Direct Loan program) and authorizing the use of master promissory notes for annual or multiyear borrowing.
The Department will be distributing more detailed information on these new programs as soon as it is available. In the meantime, I urge you to plan to participate in one or more of these exciting new initiatives to make a difference in postsecondary education. I look forward to working with you.
Richard W. Riley