Degrees Not Debt Act

To establish Federal-State higher education financing partnerships to drive down the cost of tuition for millions of American students. 1. Short title This Act may be cited as the Degrees Not Debt Act 2. State-Federal college affordability and completion partnerships Title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1070 et seq. J State-Federal college affordability and completion partnerships 499–1. Purpose The purpose of this part is to establish a State-Federal partnership that incentivizes State investment in public higher education. 499–2. Definitions In this part: (1) Eligible State The term eligible State (2) Full-time equivalent student number The term full-time equivalent student number (3) Low-income student The term low-income student (4) Net State operating support (A) In general The term net State operating support (B) Calculation A State's net State operating support shall, for a fiscal year, be an amount that is equal to the difference resulting from the gross amount of State funds appropriated and disbursed by the State and expended by the recipient institutions in the fiscal year for public higher education operating expenses in the State, minus— (i) such appropriations that are returned to the State; (ii) State-appropriated funds derived from Federal sources, including funds provided under this part; (iii) local government funds not appropriated for operating support for public higher education; (iv) amounts that are portions of multi-year appropriations to be distributed over multiple years that are not to be spent for the year for which the calculation is being made; (v) tuition charges remitted to the State to offset State appropriations; (vi) State funding for students in non-credit continuing or adult education courses and non-credit extension courses; (vii) sums appropriated to private nonprofit institutions of higher education, or to proprietary institutions of higher education, for capital outlay or operating expenses; and (viii) any other funds excluded under subparagraph (C). (C) Exclusions Net State operating support does not include— (i) funds for— (I) student aid programs that provide grants to students attending in-State private nonprofit institutions of higher education, in-State proprietary institutions of higher education, independent institutions, in-State public institutions, and out-of-State institutions; (II) capital outlay; (III) deferred maintenance; or (IV) research and development; or (ii) any other funds that the Secretary may exclude. (5) Net State operating support per FTE student The term net State operating support per FTE student (A) the net State operating support for the previous fiscal year; divided by (B) the full-time equivalent student number for the previous fiscal year. (6) Poverty line The term poverty line (7) Public institution The term public institution (8) Private nonprofit institution of higher education The term private nonprofit institution of higher education (9) Proprietary institution of higher education The term proprietary institution of higher education 499–3. Authorization; use of funds (a) Authorization The Secretary shall award annual block grants to eligible States to encourage States to provide additional funding for public higher education. (b) Use of funds by States An eligible State receiving a block grant under this part shall allocate 100 percent of block grant funding to public institutions for public higher education expenditures in accordance with subsection (c). (c) Use of funds by public institutions A public institution that receives funds under this part shall— (1) use a portion of such funds to directly reduce tuition costs or mitigate the need to raise tuition and fees for students residing in the State; (2) use a portion of such funds to support the enrollment of low-income students in the institution; (3) use a portion of such funds to support retention and degree completion of low-income students; and (4) create a publicly available report that documents the institution's efforts to satisfy the requirements described in paragraphs (1) through (3). (d) Prohibitions (1) No use for endowments A public institution may not use funds received under this part to increase the endowment of the public institution. (2) No use for athletic or commercial venues No funds awarded under this part may be used for the modernization, renovation, or repair of stadiums or other facilities of a public institution primarily used for athletic contests or events for which admission is charged to the general public. (e) State limitations on institutions Nothing in this section shall be construed to prohibit a State from establishing additional requirements for public institutions in the State for the purpose of increasing the affordability of higher education. 500. Grant formula (a) Grant Formula The Secretary shall award a block grant to an eligible State for a fiscal year in an amount equal to the product of— (1) the marginal Federal match amount for the fiscal year, as determined under subsection (b); multiplied by (2) the full-time equivalent student number for the previous fiscal year. (b) Federal Match Amount for eligible States The marginal Federal match amount shall be the following: (1) Eligible States with net State operating support per FTE student between 50 percent and 130 percent of the maximum Federal Pell Grant The marginal Federal match amount for an eligible State with a net State operating support per FTE student for the fiscal year that is equal to or more than 50 percent of the amount of the maximum Federal Pell Grant under section 401 for the most recent fiscal year but is less than 130 percent of such amount, shall be equal to the product of— (A) the amount of the maximum Federal Pell Grant for the most recent fiscal year; multiplied by (B) the result of the mathematical expression 0.26x 2 (2) Eligible States with net State operating support equal to or greater than 130 percent of the maximum Federal Pell Grant The marginal Federal match amount for an eligible State with a net State operating support per FTE student for the fiscal year equal to or greater than 130 percent of the amount of the maximum Federal Pell Grant for the most recent fiscal year, shall be equal to the sum of— (A) the amount calculated under paragraph (1) for a State with a net State operating support per FTE student equal to 130 percent of the amount of the maximum Federal Pell Grant for the most recent fiscal year; and (B) 10 percent of the amount by which the eligible State's net State operating support per FTE student exceeds 130 percent of such maximum Federal Pell Grant, except that in no case shall the marginal Federal match under this paragraph exceed an amount equal to 30 percent of the amount of the maximum Federal Pell Grant for the most recent fiscal year. (c) Ratable Reduction If the sums made available under this part for any fiscal year are insufficient to pay the full amounts that all States are eligible to receive in accordance with this section for such year, the Secretary shall establish procedures for ratably reducing each State's award amount. 501. Accountability and enforcement (a) Annual Report (1) In general Beginning for the first fiscal year after a State receives a block grant under this part, the State shall prepare and submit an annual report to the Secretary, which shall include detailed information about the State's use of the grant funds to increase the affordability of public higher education and increase the enrollment and completion rates of low-income students (as measured by eligibility for a Federal Pell Grant). (2) Contents A report described in paragraph (1) shall— (A) describe the cause of any increases in public higher education costs and the sources of new funding to address such increases; (B) describe all actions taken to incentivize public institutions to reduce tuition costs, or mitigate the need to raise tuition and fees for in-State students; (C) explain the extent to which public institutions supported the enrollment of low-income students who are eligible for Federal Pell Grants or other need-based financial assistance; (D) disclose how the State distributed the allotment provided under this part to all public institutions, and the rationale for such distribution; (E) include, as reported to the State by each public institution in the State, the aggregate graduation rates at such institutions for low-income students (based on eligibility for Federal Pell Grants), part-time students, and transfer students, disaggregated by type of degree or credential; (F) detail State efforts to improve the retention and graduation rates of low-income students at both 2-year and 4-year institutions of higher education; and (G) be publicly available in a manner that is easily accessible to parents, students, and consumer advocates. (b) Waiver of unmet financial need for certain students (1) In general Each State receiving an allotment under this part for a fiscal year shall, as a condition of receiving the allotment, ensure that each public institution in the State waives, or provides assistance (such as work study assistance, State grants, or Federal grants) to assist in meeting, any unmet financial need for a course of study (as calculated under paragraph (2)) for any student enrolled in such course of study— (A) who is a dependent student from a family with an income at or below 350 percent of the poverty line; or (B) who is an independent student with an income at or below 350 percent of the poverty line. (2) Formula For purposes of paragraph (1), a student’s unmet financial need for enrollment in a course study shall be equal to— (A) the cost of attendance for such course of study for such student, minus (B) the expected family contribution for such student, minus (C) estimated financial assistance not received under this title (as defined in section 480(j)), minus (D) the amount of the Federal Pell Grant awarded to such student for such course of study. (c) Maintaining Net State Operating Support Per FTE Student (1) In general Each State receiving an allotment under this part for a fiscal year shall— (A) ensure that the amount expended by the State, from funds derived from non-Federal sources, for net State operating support per FTE student for the preceding fiscal year was not less than the amount expended by the State for net State operating support per FTE student for the second preceding fiscal year; and (B) demonstrate the State's compliance with subparagraph (A) by providing the Secretary with a written assurance and detailed documentation. (2) Penalty If a State does not comply with paragraph (1), the State's grant award under this part shall be reduced by an amount equal to the product of— (A) the difference between— (i) the net State operating support per FTE student for the second preceding fiscal year; minus (ii) the net State operating support per FTE student for the preceding fiscal year; multiplied by (B) the full-time equivalent student number for the previous fiscal year. (d) Maintenance of effort for State-Based financial aid and avoidance of tuition inflation Each State receiving an allotment under this part for a fiscal year shall, as a condition of receiving the allotment— (1) maintain the level of State student need-based financial aid support provided for costs associated with postsecondary education at not less than the average annual level of such support provided for the 3 academic years immediately preceding the year for which the State is receiving the allotment; and (2) ensure that for the academic year immediately following the academic year for which the State is receiving the allotment, all public institutions of higher education in the State will not increase tuition for in-State students by a percentage greater than the estimated percentage increase in the Consumer Price Index (as determined by the Secretary, using the definition in section 478(f)) for the calendar year for which the State is receiving the allotment. (e) Authority To compromise Notwithstanding subsections (c) and (d), the Secretary may waive any maintenance of support and effort requirement, or the avoidance of tuition requirement, described in such subsections for a State if there is a clear case of a significant economic downturn in the State as evidenced by a reduction in State domestic product, real per capita income, and employment. Such determination shall only be made by the Secretary following a written appeal by the State that documents recent and significant decreases in economic activity in the State. (f) Reporting on percentage of low-Income students Each State that received an allotment under this part for a fiscal year and that desires to receive another such allotment for the succeeding fiscal year shall, as a condition of receiving such other allotment, report to the Secretary— (1) on the percentage of enrollment of low-income students at each public institution in the State (out of the total student enrollment in such institution) for the mostly recently completed academic year, as so reported by such institutions to the State; and (2) with respect to any recently completed academic year for which the percentage of enrollment of such students at a public institution in the State was below the percentage of enrollment of such students in public institutions in the United States as a whole for such year (out of the total student enrollment in such public institutions for such year), an explanation from such institution in the State for the reason for such reduced enrollment for low-income students at the institution for such year. 502. Authorization of appropriations There are authorized to be appropriated to carry out this part such sums as may be necessary for fiscal year 2017 and each of the five succeeding fiscal years. .

Summary: Degrees Not Debt Act This bill amends title IV (Student Assistance) of the Higher Education Act of 1965 to establish a federal-state partnership to promote state investment in public higher education. It directs the Department of Education to award matching block grants to states to reduce tuition costs and support the enrollment, retention, and degree completion of low-income students at public institutions of higher education. A state that receives a grant must waive any unmet financial need for certain low-income students, maintain or increase per-student operating support, maintain state-based financial aid levels, and limit tuition increases at public institutions of higher education. The bill prohibits the use of grant funds to increase an institution's endowment or to modernize, renovate, or repair athletic facilities.