Fostering Undergraduate Talent by Unlocking Resources for Education (FUTURE) Act - H.R.5363

BACKGROUND: The measure is similar to HR 2486, which the House passed the measure Sept. 17 by voice vote under suspension of the rules, but which the Senate amended and passed by voice vote on Dec. 5.

    The Senate modified that measure by making funding for Historically Black Colleges and Universities (HBCUs) permanent and increasing Pell grant funding. To offset that spending, the Senate required an exchange of relevant taxpayer information between the Education Department and the IRS with regard to individuals' Free Application for Federal Student Aid (FAFSA) form, applications for income-driven repayment on federal student loans, and applications for loan discharge due to total and permanent disability; this direct exchange of information is anticipated to save the government money. However, House Democrats were concerned that the authorized exchange of information did not provide sufficient confidentiality protections and introduced a new bill, HR 5363, with many of the same provisions but with additional protections.

    FAFSA is the form students must use to apply for federal and state student financial aid. Most public institutions of higher education also require the FAFSA. The application must be submitted for each year the student would like to receive aid. Aid is awarded on the basis of need, and federal student loans, even though they need to be repaid, are considered student aid. The FAFSA consists of over 100 questions, and the length and complexity of the form often prevents students from applying for aid.

    The House and Senate bills seek to simplify the FAFSA by eliminating multiple questions from the application and requiring students to agree to allow the IRS to provide their tax information to the Education Department so that students would no longer need to verify that the information they provide to the Education Department matches the information given to the IRS. In addition, students who are repaying their federal student loans using repayment plans where their monthly payments are based on their income would no longer be required to submit annual paperwork regarding their income, while students who are totally and permanently disabled could also request that the IRS transmit this information to the Education Department directly.

SUMMARY: This bill permanently provides funding for minority-serving institutions under the Higher Education Act, it increases funding for Pell Grants, and it simplifies the Free Application for Federal Student Aid (FAFSA) form and streamlines repayment for student loan borrowers using income-driven repayment plans by requiring an exchange of information between the Education Department and the IRS.

Higher Education Funding

    The bill permanently provides $225 million a year (the current funding level) for minority-serving institutions under the Higher Education Act. Funding for those schools expired on Sept. 30, 2019.

    Minority-serving institutions of higher education (MSIs) include but are not limited to Historically Black Colleges and Universities (HBCUs). MSIs are a federally recognized category of institution of higher education that receives federal funding under Title III of the Higher Education Act, which authorizes grants to strengthen the academic quality, institutional management, and financial stability of institutions of higher education. MSIs educate nearly four million students — more than one quarter of all undergraduates — but have historically been underfunded.

    It also increases funding for Pell grants, authorizing $1.455 billion for FY 2020 (up from $1.43 billion under current law) and $1.17 billion for FY 2021 and for each succeeding year (up from $1.145 billion).

    Pell grants are a form of federal student aid that are usually given to undergraduate students with exceptional financial need who have not yet earned a degree. Pell grants are not loans and generally do not have to be repaid.

Disclosure of Tax Return Information

    The bill requires the IRS, upon written request from the Education Department, to disclose to the department the taxpayer information necessary for determining income-driven student loan repayment plans for individuals, the discharge of loans based on total and permanent disability, and other taxpayer information necessary for determining eligibility for, and the amount of, federal student financial aid.

    In turn, it requires the Education Department to establish a process under which a borrower who is repaying a federal student loan using an income-driven repayment plan may have the department use tax return information provided by the IRS to determine the borrower's repayment obligation, without the borrower having to take any further action. Similarly, the department must establish a process under which tax return information would be used to determine the borrower's continued eligibility for a discharge of federal student loans based on total and permanent disability. Borrowers must be able to opt out of the disclosure of information to the department from the IRS at any time and instead provide the information to the department directly. They must also be given the opportunity to update their tax return information prior of determination for eligibility of aid or certain repayment plans.

    On any application for federal student aid, income-driven loan repayment, or the discharge of loans based on total and permanent disability, the Education Department must notify individuals that if they assent the department will be able to ask the IRS to disclose tax return information, and that failure to give assent will mean the department cannot calculate the individual's eligibility for student aid, income-driven loan repayment or loan discharge. The department must require the individual's consent as a condition of eligibility.

    The Education Department also would be authorized to transmit the tax information it receives from the IRS to institutions of higher education, state higher education agencies and scholarship organizations as needed for their determinations of federal student aid. The department, schools, state agencies and other organizations must maintain the confidentiality and integrity of the information received and transmitted.

Reporting Requirements

    The bill requires the Education Department to annually report to the Treasury Department on the number of redisclosures it made to other parties of information that was originally provided to the department by the IRS, and whether there was any unauthorized use, access, or disclosure of the information. Treasury must annually report to Congress on the disclosures made by the IRS to the Education Department.

    It also requires the Education and Treasury departments to issue several joint reports to Congress regarding implementation of the taxpayer information requirements, and to evaluate the impact of such disclosures on the processing of FAFSA and income-driven loan repayment plans. The reports should also address any implementation issues and provide suggestions for potential improvements.

    Those joint reports would be due 90 days after enactment, 120 days after the first day the disclosure process is established, and one year after the second report.