Education, Early Childhood and Workforce Committee Home

December 10, 2007

Dear Speaker Pelosi, Representative Boehner, Chairman Miller, and Representative McKeon:

As you proceed with the consideration of the College Opportunity and Affordability Act (H.R. 4137), the nation’s governors write to express our unified opposition to the “Maintenance of Effort” (MOE) mandate in Section 108 and to ask for the immediate removal of the language. The MOE mandate is an unprecedented overreach of federal authority that is unworkable for state budgets and will dictate state higher education investments. It ignores the cyclical nature of state budgets and establishes an unrealistic baseline for higher education investments within states.

Governors are committed to helping ensure that college is affordable and accessible. Between fiscal 1995 and 2005, states increased the state investment into higher education by 61 percent for all state funds and 41.9 percent of general funds.

Unfortunately, the MOE mandate would have a chilling, negative impact on future state higher education investments. Given that the financial condition of states can fluctuate significantly, the MOE mandate will act as a potential deterrent to increases in state funding for higher education and actually contribute to an increase in the cost for students and families. States will halt capital improvement projects, decrease or slow higher education spending, and cutback or eliminate plans to expand higher education programming, scholarships, or staffing. Additionally, when a state is unable to follow the MOE mandate, the consequences as prescribed by the section would directly and disproportionally punish low-income students and families attempting to afford higher education.

In addition, governors are concerned that the definition of a “private educational loan” inadvertently equates state higher educational loans with private industry loans. While governors support efforts to improve transparency and accountability in the private lending industry, the definition unnecessarily subjects state entities – already covered by rigorous and numerous public disclosure rules and regulations – to the new requirements for private loan lenders.

Earlier this year, the U.S. House of Representatives appropriately eliminated the MOE mandate during the Higher Education reconciliation debate. The nation’s governors appreciated your leadership to resolve this problem for students and families, and ask for you to again remove the MOE mandate. Governors also would appreciate your modification of the definition of “private educational loan” to exclude loans made, secured, or guaranteed by state entities.

Thank you for your consideration on these important matters.

Sincerely,

cc: Members of the U.S. Senate Health, Education, Labor, and Pensions Committee
Members of U.S. House